b"MC2021_FeedYourPassion_Poster_Western_HQpriint.pdf 1 2/17/21 3:39 PMBy Jim and Bobbi Jeen Olson,WesternTradingPost.comT he Romans were said to have charged the first buyers premium at auctions, thus dating the chargeback to around the time of the birth of Jesus Christ. However, the modern-day buyer's premium was re-introduced during the mid-1970s by Christie's and Sothebys auctions. The introductory rate they charged was 10%. Often called by the slang term juice, buyers premiums have been around ever sinceand are very common now. What is a buyers premium (BP) some may ask?A buyer's premium is a charge or fee (usually a percentage) in addition to the hammer price of an item at an auction. The winning bidder is required to pay both the hammer price (winning bid announced) and a percentage of that price, AKA buyer's premium. This percentage may range from 1% to 10% in real estate auctions, from 10% to 30% in art and collectibles auctions, and equipment and car type auctions usually fall somewhere in the middle of those ranges. It is estimated today that over 80% of auctioneers charge a buyers premium. How exactly is a buyers premium calculated?C FEED YOUR Lets say a piece of art sold for $5,000Think about this for a minute: Everyone who shops, and there was a 10% premium at this particular auction. The price paid by the buyer would be $5,500 ($5,000 hammer price plus 10% BP). Taxes M and any other applicable fees such asno matter where they shop, pays a buyers premium shipping and handling may be addedwhether they realize it or not. It may not be called Y PASSION on top of that. But why even charge asuch outside of the auction world, but I submit to you CM buyers premium at all? that every purchase has it built-in. In a retail setting, its called a markup, while in auctions, its called MY Auction houses charge a BP forcommissions or premiumsbut everyone pays it no several reasons, but the bottom linematter where you shop.CY isto stay in business and hopefully CMY remain profitable. (As a side note,You see, in a retail setting, the seller sets a price. They the main segment of the auctionfactor in expenses and profit margin (and usually K industry, making up most of thea little room for discounts or sales) and then set a Grown for the Life We Lovesmall percentage of auctions that doprice deemed appropriate and that the market will not charge a BP, is the livestock auction industry. Consequently, many of thebear. Every retail outlet, from a big box store to a local mom and pop, has the smaller livestock auction businesses have gone under in the last couple of decadesoverhead and profit margin built into the price a customer pays. Customers just because margins were too small to remain in business.) So a buyers premium isdont notice all the little fees added in because they are lumped into one number basically a fee to help cover the escalating costs involved with running an auctionwithout being broken down. At an auction, however, the buyers set the price. business. Many costs go into the events which most people do not consider The price paid for an item will not go any higher than what two or more bidders and a whole new category of costs have evolved over the last few decades with theare willing to bid up to. And the auctioneer's job is to bring those sellers and BUY 1, SAVE $2.00 now, almost necessity, of having auctions offered online. For those who advocatebuyers together. While facilitating these true market discovery transactions, they against a BP, maybe try to think of it as a necessary evil for the auction to keepare typically paid on a commission basis. But just like a retail outlet, there are bringing you items to bid on. But dont auctions collect a commission from theexpenses and profit margins which have to be covered (if they want to remain in seller? some ask. business anyway). What auction customers should remember (and factor in) is that even if you add up the fees, etc., the overall purchase price paid at auction Most of the time an auctioneer does collect a commission from both the selleris often less, or at least not more than, what one might expect to pay in a retail and from the buyer. However, as competition for quality items has becomesetting. And theres always the chance it could be much lower! Thats one of the on any bagged or compressed bale product greater, commissions charged to sellers went down over time. Before buyersallures of an auction. premiums were charged, sellers usually paid higher commissions than they do now, even though it is now more expensive than ever to put on auctions.Savvy bidders know about the fees and factor them in. It is recommended to have Visit standleeforage.com/coupons to print this offer. In some extreme cases, if a seller has a particularly rare or valuable item thatyour maximum bid amount in mind before bidding, that way one can calculate several auction houses wish to represent, they may actually pay no commissionthe buyers premium, taxes, shipping, handling, and any other applicable fees Coupon required at purchase. at all and the only way for an auctioneer to cover expenses is through thebeforehand and know the amount you feel comfortable bidding up to.buyers premium. The norm nowadays however is for the auctioneer to collect a little something from each side (seller and buyer) as their profits from theTo sum it up, everyone pays a markup/premium/juice or whatever you want to sellers side have diminished.call it when you purchase items. That is the only way businesses selling the items can remain open. While some complain about the fees, the truth isthe market In the auction business, there are expenses associated with both the buying sidesets them. In an open, capitalistic marketplace, folks who charge too much do not and selling side of the transactionand expenses associated with the buying sideremain in business long. If an auction company (or any other business) charges have skyrocketed. As mentioned, a prime example of an expense that did not usetheir sellers too much (or doesnt pay their suppliers enough), before long they have to be a factor 40 years ago are the fees charged by online providers who makenothing good to sell because sellers go elsewhere where they are treated better. The it possible for an auctioneer to present items to buyers at their convenience, nosame logic applies to the buyers premium. If it is too high for the item(s) being matter where they are.offered, buyers will not patronize that auction (business) for long and go elsewhere. Offer is valid Conversely, if a business does not charge enough, it will not be open long. standleeforage.com April 1 stto May 31 st ArizonaRealCountry.com May 2021 39"