Anatomy of an Auction – The Auctioneer’s Percentage
QUESTION: If I sell some of my collectibles at auction, what percentage should I expect to pay an auctioneer? – Marti, via email
ANSWER: The answer to your question is . . . it depends . . . on a lot of variables.
• First: Before quoting a commission rate, the auctioneer is going to want to know the quality of your pieces, their demand in the market, and the quantity you have to sell. Whether you have enough items to make a large, quality auction, as opposed to merely consigning a few pieces will also make a real difference in the fee you can negotiate.
• Second: Don’t get confused by an auctioneer’s sales pitch and lose sight of the one and only number you’re in most interested in—the net amount that will be returned to you from the auction. There is no more important financial consideration for you than this. If one auctioneer quotes you a flat commission of 25 percent that will include everything, that might be better than a commission rate of 10 percent where you have to pay all of the other costs associated with the auction. So you have to know all of these “other” costs before you can calculate which auctioneer’s quote is better, and then you must be able to obtain a reasonable estimate as to what revenue the auction is expected to generate.
• Third: So, in addition to the auctioneer’s commission, what might the expenses be to conduct an auction? Here’s a general summary of possible costs: Advertising, labor and equipment to pack, move and haul the goods, rent for the auction site, rent for a tent or building, rent for chairs, a cashier, a clerk, fees from credit card companies, labor for ground people to move and load the goods at the auction, ring people, a backup auctioneer, security, liability insurance for the premises, portable toilets, and labor for post-auction cleanup. Every auction doesn’t include all of these costs, but some auctions include all of these costs and more. It just depends.
• Fourth: You may want to discuss the buyers’ premium with the auctioneer to determine whether its use might be advantageous to you for the sale of your goods. The buyer’s premium is a useful tool to reduce the selling commission paid by sellers.
• Finally: I strongly urge you to look for an honest and professional auctioneer. This is the auctioneer who knows how to conduct an excellent auction, who has a good following of bidders, who will do the best job for you, and who will do it legally and ethically. There’s nothing more important than having a professional like this working for you. When you’ve engaged such an auctioneer, the bottom line will work out the best for you, too. So don’t forget the old adage, “You get what you pay for.”
— by Steve Proffitt
Steve Proffitt is an auctioneer and attorney at law He is the general counsel with The Motley’s Auction Group and an instructor Reppert School of Auctioneering.
© Copyright John Stephen Proffitt III
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