Vendors Commission & Buyers Premium

[seahorsefanatic 10]

A bone of contention for me over the last number of years are the fee structures applied by auction houses.

 

While I feel it is fair that auction houses charge a fee in the form of a percentage of the price realised due to the work they put in to sell a lot, I feel it is unfair to charge the buyer a premium when all the input between the buyer and auctioner has come from the buyers side. The buyer is the one who has travelled and made time available to support the auction.

 

Our well know auction house in Rosebank charges the buyer 15% of the price realised which I feel is a rip-off and everyone has become accustomed to accepting it as part of the folklore and custom of the trade. Yes, they do produce a glossy auction publication but this is paid for in the subscription rates charged.

 

What really irks me is the smaller auctioneer that produces a simple typed out list of items for auction of 3-4 pages with no illustrations and then expects the buyer to part with 10-15% of the realised price as a "buyers premium" and worse this just gets accepted. This type of auctioner is then generating R25,000 - R30,000 for every R100,000 sales when including the vendors commission with the buyers premium .

 

If the auctioner provided refreshments etc at his own cost then this might be accepted as a "premium" to cover these costs but in most cases little if anything is provided.

 

The last auction I attended where a buyers premium was applicable, the toilets were filthy and no soap provided. There were no refreshments available ( even to

purchase ) Parking was also a hit and miss afair.

 

I would be interested in what others feel. Are there reasons to substanciate the buyers premium ? I would like to hear from the auctioneers perspective on how they would argue that "buyers premium" being a fair add-on cost.

[Jacques Kuun 10]

Hello Seahorsefanatic

 

As you might know, I am not an auctioneer, but I would like to add some input into this matter.

 

I can see no justification whatsoever for a Buyer’s Premium, except for greed (not profit).

 

At the regular Saturday’s Auctions, the lots are generally poorly described and extremely poorly researched. Or rather the lots are not researched at all. Descriptions like Finds Possible, Mixed Condition, etc come to mind. The auctioneer is simply relying on the different buyers to do the work for him. For this he charges them a Buyer’s Premium! If two buyers both see something of value, the price will go high and the auctioneer reaps the benefit of the knowledge of the bidders.

 

There is also no recourse for mixed lots. A lot, supposedly mint, might look wonderful and fresh in the hard to open plastic sleeves. Yet, they might end up as being without gum and / or with rust. Once again the auctioneer carries no risk, only the buyer - and the buyer gets charged for this!

 

Lack of decent toilet facilities / refreshments shows one thing only: contempt for the client.

 

Regards

 

Jacques

[lilythepink 11]

I also agree that charges buyers commision is ridiculous. We go and bid the best price we can and then discover we have to pay another 10% to 15%. It happens here in Grahamstown, too!!

[mellowred 10]

And in Herms. Perhaps we should open auction houses .

 

In fact it's a good business to be in. No outlay for stock; immediate payment; no transportation fees.

[Jacques Kuun 10]

Hello Seahorsefanatic

Amazing, is it not?

I know of at LEAST two Stamp Auctioneers who (sometimes) read the forum. I think that the total could be as high as six.

Absolute silence.

Regards

Jacques

[seahorsefanatic 10]

Hi Jacques and others that know me.

 

Is'nt it typical that no auctioneer has responded !!!:mad: Are they all gutless ? I would love to hear their reasoning on this one. Bad habits are hard to break especially for those involved.

 

I would be happy to pay the buyers commission if the reasoning was sound such as providing refreshments before, during a break and afterwards. This is cheap when considered against purchases of say R2,000. A beer or wiskey or two is little return on R200-R300 having to be forked out extra when spending R2,000. Imagine those more afluent collectors who might spend R10,000 or more at one sitting. They end up paying thousands extra !!!.

 

Come on auctioneers, lets hear from you !!!!

[seahorsefanatic 10]

I have waited 3 weeks in vain for some response from our auctioneers and true to form this appears to be a question they are not prepared to answer with reasonable substanciation. Come on Clintin, Paul and Wolfgang lets hear it from you guys......the silence is defening. :p:p:p

[Jacques Kuun 10]

Hello Seahorsefanatic

this appears to be a question they are not prepared to answer with reasonable substanciation.

 

You are totally wrong here.

They are not replying AT ALL!

Regards

Jacques

[ISITAMPO AFRICA 10]

Auctioneering myths and legends

 

Well Genlteman nice of you to generalise auctioneers in one group. After 10 years plus I have a open door policy if you have a problem talk to me.

I have done 400 plus auctions and only 7 had buyers premium 5 of these were book auctions where printing of catalogues in postage costs were in excess of R18 000.

 

The 2 auctions which had a 10% buyers premium were big auctions where snaks, wine and cooldrink including catering was supplied.

 

The Sandton auction 2nd Saturday of the month no buyers premium starts to be put together a week in advance auction lots 70% private vendors, 10% estate lots and a joint 20% lots purchased for resale as vendors can not wait for a auction. Commision based on a success few of 20% of the sale of an item above reserve price, no listing fees.

 

The Hall is run by the Johannesburg City Council I supply my own soap and towels for the day. As I stay 180kms from the venue I find it hard to beleive that I am responsible for a leaking toilet or a pot hole in a Sandton road.

 

The real issue is I had 130 lots last auction 65 room bidders and 12 internet bidders.

Most dealers are getting outbid by their clients and most dealers are finding material in short supply. However some dealers buy oversees on ebay or other auctions and are doing well as they are getting what their clients want.

 

So for the record I am Clinton Goslin I do 2 auctions a month always open to advice good or bad so do not generalise AUCTIONEERS.

I can be contacted on the email

 

As I do the Boksburg auction I feel that we have given clients what they want and we have listened to our dealers and have tried to keep a balance. A good percentage of bid or buys stamp material has passed through my auctions.

 

Can we work for free no we can not, can bid or buy have everything for free no they can not. Can I go to Pick and Pay and ask for the cost price on any item,the answer is no.

 

I do not mind an auction watch dog but if you going to bite get the right guys !!!!!!

[Jacques Kuun 10]

Hello Clinton

 

We see each other often enough so I refuse to get into a public argument with you. As you know, I am not afraid to talk man to man.

 

I put my case down and was referring to stamp auctioneers who charge Buyer’s Premium. I was hoping for input (to see the other side of the coin). In a later post I asked for input from any stamp auctioneer. Not for one moment did I generalise.

 

Regards

 

Jacques

[ISITAMPO AFRICA 10]

Ok Jacque I do not have the time for a mud fight.

 

In general the auctions that I run the majority of lots represented are described by collectors so out of respect we keep to their descriptions.

Detailing lots would be a great idea and if you see next up coming auctions there is detail for better lots ranging from R500-R250 000.

 

Remember that there is one week between my auctions, even bigger auction houses have time restraints and they run 3-4 auctions a year.

 

In general I have checked a few auction houses and buyers premiums can run from 18%-20%, there are in some cases lotting fees and various taxes. So a buyer can be pay quite a bit extra on any purchase.

 

As we are in Africa there is no excuse with limited funds and staff we try bring our clients what they want. And if one would ask the regular buyers why they keep on coming back one might get the answer.

 

Anyway politics is for politicians and I am not one, I have enjoyed stamps since the age of 5 and hope to do so fo another 40 years plus.

 

As this is a sensitive market why try and disect the methods that auctioneers use to run their businesses surely our clients are mature enough to make their own choices when buying from an auction house or specific auctioneer.

 

Next time you guys write on the forum about something that relates to auctioneers please drop me an email and I am sure you will not wait 3 weeks for an respose, as I normally would respond straight away , as I do not read the forum please inform me when you require input on any matter I might assist in.

 

Best regards

Clinton Goslin

[lilythepink 11]

I have to agree with Isitampo Africa. Buyers who know about the premiums will factor it in to their bidding, I'm sure.

[Jacques Kuun 10]

Hello Lillythepink

Buyers who know about the premiums will factor it in to their bidding

Exactly – which ALWAYS results in a lower nett price to the vendor!

 

Hello Clinton

For a person who does not have time for a mud fight, you are continuing in a very aggressive mode. Also, I an under no obligation to send you an email for any reason whatsoever.

Regards

Jacques

[qball 12]

Hi All

 

Please take note of the forum rules, do not attack the poster but rather argue the post.

 

Thank you.

 

Cuan

[seahorsefanatic 10]

Hi to you all

 

I see the post that I originally started is being taken down a sideroad that was never intended. I was hoping for a response from any auctioneer especially those charging a buyers premium to get their side of the story and to try and understand why a buyers premium is fair/legitimate/substanciated in any way.

 

Clinton, this was not directed at you due to all the input you do and the extra mile that you put in which is greatly appreciated and I know that you dont get involved in charging a buyers premium. It became very frustrating as not one of those dealers who are auctioneers gave a response which leads me to believe that they cannot back up their buyers premium with a valid arguement.

 

I do most certainly have a choice on whether to support the particular auction or not and failing this will adjust my bid to take into account the buyers premium, but as stated by Jacques, this results in a lower price for the seller. The auctioneer is thus ensuring that he maximises his returns from the auction by capturing commission from both sides.

 

Why is everyone so silent on this question ? I see a number of people have read it but no comment ? I dont deny anyone a living but harvesting 30% from both sides and based on sales of R50,000 this would add up to R15,000 for about 2 hours work. It just doesnt add up - or am I wrong ?

[Jacques Kuun 10]

Hello Clinton

 

My previous post was supposed to be my last on the matter, but as there had been some developments I am forced to write this post.

 

politics is for politicians and I am not one

But then why did you politicize the issue? You preferred to take the matter “out of the forum” by canvassing other people.

 

Consider a major truly professional “auction house”:

(1) They employ specialists and experts on a full time basis.

(2) They employ additional specialists and consultants on a part time basis.

(3) They pay rent for their offices which reflect their prestige in the market.

(4) They research the material consigned to them.

(5) They break up large collections / accumulations according to what they believe would maximize the total knock down amount of the original lot.

(6) They advertise in prestige stamp magazines (locally and internationally).

(7) They produce and provide a glossy catalogue that makes that "Special Stamp" appear so much more desirable.

(8) They set aside viewing days, with additional manpower needed for this.

(9) They have maintained their standing in the market over twenty-five years or more which allows them to alert their clients about upcoming specialist items or collections – which results in a higher knock-down price to the vendor.

I am sure that I can expand this list if I wanted to…..

 

All of the above cost MONEY!

 

Once at an action run by Stephen Welz & Co, I bought a lot with the knock down price of R55 000-00 (not a major amount to most dealers or serious collectors, but to me it was a huge amount). The buyer’s premium without vat came to almost R10 000-00, which as Lilythepink said, I took into account in anyway (and which in turn resulted in a lower return to the vendor as I have pointed out later). However, without the above nine points, the lot would not have reached the actual knock down price. I feel that the auction house fully deserved their buyer’s premium. Would the same lot have attracted the same interest and knock down price at ANY other auction in the RSA?

 

the majority of lots represented are described by collectors so out of respect we keep to their descriptions.

It is the duty of the auctioneer to give advice to the vendor and to dispose of the goods in a manner that will result in the maximum financial benefit to both the vendor and the auctioneer. Respect is not applicable when it comes to describing lots correctly. For instance, should an early QEII GB lot contain the early phosphors in blocks of 4 and the vendor is unaware of this, it is the duty of the auctioneer to point this out to potential bidders / buyers. In this example, the knock down price could increase by R3000-00 to R5 000-00. Surely the vendor would appreciate this increase? Or would he rather be offended because his original description was not respected?

 

I can go on, but I am sure that I have made my point.

 

Regards

 

Jacques

[ISITAMPO AFRICA 10]

Once again Jacque my auction is designed by the people for the people, so it is great that you explained to me how auction houses are run, I will keep this in mind when I get bigger, surprise maybe I will be forced to charge a buyers premium as I will have all these overheads.

As this mule has been run into the ground and the original points lost, lets stick to our business. If an individual wants to attack a person or a business get legal wise, I still do not beleive that this discussion has got us anywhere I agree to disagree and that is where it stays. Please find some refreshing subject to chat about.

[qball 12]

Ok folks, I think this thread has come to an end. It will be closed now.

 

Regards

Cuan