I was wondering if any of you have any knowledge of industrial/laboratory auctions. I have to help close down a facility, and I have been getting bids from some liquidators. One of them wants to run an auction, and part of his terms include a buyer’s premium. I am familiar with this concept, but I am having great difficulty figuring out what a typical % should be in this area. I have found information for the art and real estate areas, but not for mixed light industrial/chemistry laboratory equipment.
Does anyone here have any experience? A reference I can bring to the board would be even cooler.
The total the buyers pay = the total that the auctioneer gets, plus the total the vendor gets.
EXCEPT, by exposing it as a buyers premium, the auctioneers fee is removed from the purchase price … which can help the buyer avoid taxes…
Anything else is just a name … the the formula used.
How about call it a vendors deduction. and so the buyers premium is 0 !
That means the buyer pays what he bid…
When the buyers pay $100, the auctioneer gets $15 and the vendor gets $85.
Now do you realise why its a buyers premium ? So that it can be claimed as a cost of purchase, and yet if there is any government tax on the purchase value, the buyers premium is excluded from that. If there are no taxes to be paid by the buyer, then why bother running the auction with a buyers fee system ?
Thanks for the feedback. Based on my read of the contract(s), they are trying to pile on with many small revenue streams that add up to a rather large one. I’ve negotiated enough contracts in my day that this doesn’t intimidate me, but I like to be educated as to the typical value of such things prior to negotiating.
The initial contract simply gave them the right to set a BP at the auction, and that won’t fly. If they have one, I will know what it is before signing, naturally.
Looking at some of this vendor’s other auctions, it appears they hammer a price and then add the BP to that number, which if disclosed to the bidders in advance is OK with me. I should say this is a large and well known vendor, and their references do check out. Nonetheless, the antennae are up.
Any auction war stories are welcome. Normally I build things, not take them apart. As I mentioned, this is industrial/lab/office stuff, not open to the public. Some items will go for scrap value, but others could well fetch north of $100,000.
There is an auction house in the Twin Cities here i often attend, buyers’ premium to them really depends on how much work they have to put into making the auction happen.
If they are just taking pictures of a few big machines they typically charge 5%, if they take the entire business to their warehouse and piece it out they sometimes charge 20-25%