Auction Houses, Dealers and Buyer Premiums

Do dealers have to pay the full buyers premiums in auctions? If they have to pay, how is this guaranteed? Is there any regulation and if not should there be?
Thanks for your replies,
earlyAurum
Thanks for your replies,
earlyAurum
0
Comments
-Paul
Before bidding on anything in any auction people should read over the terms and conditions to clarify any confusions.
Authorized dealer for PCGS, PCGS Currency, NGC, NCS, PMG, CAC. Member of the PNG, ANA. Member dealer of CoinPlex and CCE/FACTS as "CH5"
For example some auction houses offer a net 105%+ of hammer price for larger and choice consignments. That works out to be an 8.7% overall commission to the auction house. Clearly, no one "paid" a 15% buyer's fee in this scenario. The auction house actually gave 6.3% of the buyer's fee "back" to the consignor. Even a consignor getting 100% of the hammer price is paying a net 13% commission. The bidders are paying 0%. If an auction house is able to convince a seller to consign for say 90% of hammer (explained as a 10% seller's fee), then their net in the end will be 90/115 or 78.3%. Only the seller is contributing to the consignment/bidding fees, never the buyer. A buyer's fee should really be called Seller's fee #2.
roadrunner
<< <i>The dealers "account" for the buyer's premium but they NEVER actually pay it unless they forget to back it out. The seller ultimately pays it along with whatever consignment percentage fee they have negotiated. Bidders merely back off their bids 15%. That certainly isn't coming out of their pockets. Why would anyone pay a 15% fee for the privilege of being able to bid/buy in an auction?
For example some auction houses offer a net 105% of hammer price for larger and choice consignments. That works out to be an 8.7% overall commission. Clearly, no one "paid" a 15% buyer's fee in this scenario. The auction house actually gave 6.3% of the buyer's fee back to the consignor. Even a consignor getting 100% of the hammer price is paying a net 13% commission. The bidders are paying 0%. If an auction house is able to convince a seller to consign for say 90% of hammer (explained as a 10% seller's fee), then their net in the end will be 90/115 or 78.3%. Only the seller is contributing to the consignment/bidding fees, never the buyer.
roadrunner >>
While I agree with your analysis, I think that the OP was asking if everyone pays 15% on top of hammer when they win an auction coin at Heritage, and the answer is "Yes".
they probably just pay final value minus sellers fee
of course they have high overhead
<< <i>I am not sure if Heritage pays buyers premium when they 'win' a coin in a Heritage auction
they probably just pay final value minus sellers fee
of course they have high overhead >>
I would assume that for tax purposes they would pay the fee--at least on paper. (Note: I am NOT a tax accountant--this might be illegal. If so, then disregard my ignorance.)