(Following is a letter I sent to the publisher the Maine Antiques Digest and Steve Proffitt who writes a monthly column titled “Auction Law and Ethics”. He raised issues that I felt needed to be rebutted. See if you agree)
I follow your articles with great interest, as you reach a wide and knowledgeable audience; however, I find you have several flaws and biases in your last article supporting the buyer’s premium.
- Your suggestion that the buyer’s premium was designed “to lure sellers at auction” is absurd. Even the most ardent auctioneer will first acknowledge the 3 D’s (death, divorce, and debt) as historically the prime motivation to consign. A collector isn’t motivated to sell by the possible return on investment or deterred by the costs of consigning to an auctioneer. Buying art and antiques is not a day-trader occupation and motivation to sell is really oriented by long term considerations. The cost of a seller’s commission and associated fees are available from the proceeds and can always be negotiated. The buyer’s premium has no effect on the seller’s net proceeds; it is only the auctioneer who benefit’s financially.
- You state that the buyer’s premium belongs to the seller. If this is the case why does the auctioneer’s after sale document not disclose to the seller specifically the real after sale results, with the buyer’s premium and the auctioneer’s commission? If you did, I think consigners might be more aware of exactly how much the auctioneer is really making on their property. It can be very compelling to see what profit the auctioneer is really making, and what the seller is actually getting from the gross transaction. As the buyer’s premium is the seller’s, this lack of disclosure is very deceptive.
- You maintained that the buyer’s premium is “a flexible marketing tool for the auctioneers to create additional revenue for the seller”. I find a big disconnect here. I have never seen an auctioneer change his buyer’s premium for different consigners in a sale (charging 15% to one and another 20%). The fact is it is the most inflexible and non-negotiable part of an auction. A seller can usually attempt to negotiate fees, but a buyer’s premium can’t be touched by the buyer and the seller has no reason to tell the auctioneer to change his public policy.
Finally, I agree with your conclusion that the buyer’s premium will eventually go to 30% and will be the sole source of an auctioneer’s commission. I actually wish this were the case because it resolves a big conflict of interest auctioneers have trying to take a commission representing a seller and “services” to the buyer to justify the buyer’s premium. That conflict is unique to auctioneering only in our industry.