Understanding Buyer’s Premium in Auctions

In the world of auctions, whether it's for personal property or real estate, you may come across the term "buyer's premium." This is an important concept to understand, as it plays a crucial role in the auction process and can impact the final price you pay for an item.

A buyer's premium is an additional percentage of the winning bid that the buyer must pay on top of the hammer price. In personal property auctions, this premium is used to cover the costs associated with conducting the auction, such as paying for the bidding platform and credit card fees, and other costs. By implementing a buyer's premium, auction houses can maintain a high level of professionalism and continue to offer quality services to both buyers and sellers.

In real estate auctions, the buyer's premium often becomes part of the contract price. This means that when you place the winning bid, the premium is added to the hammer price to determine the total purchase price of the property. It's essential to factor in the buyer's premium when budgeting for your auction purchases to ensure you're prepared for the final cost.

Buyer's premiums are a common practice in the auction industry, and they contribute to the smooth running and success of these events.