Auction buyer premiums rip off

[birdsallpl]

I have just looked at the Bonhams auction catalogue and the buyers premium is 25% up to £50,000 of the hammer price plus VAT. So you will have to put 30% on the price you win it at. How can they possibly justify such a commission? Most auctions these days run at 15% to 18% plus VAT.

They also of course charge the seller a commission which is understandable because they have to store the item, photograph it and generate a catalogue to put the item in. However from experience I know most auction houses charge for the photo and insurance on top of the sellers commission. But what exactly do they do for the buyer??

How did it go from generally about 5% to todays outrages cons. Are we just becoming soft in the head!

[Kalahari]

Buyer's premium looks like a bit of a fraud to me. If I pay a premium to the auctioneer he should be working for me and try and get it for the lowest price possible. This is directly against the seller's interest, who is also paying the auctioneer, who wants the highest price possible.

 

Unfortunately this is the way all auctioneers work. I guess the answer is if you don't like it don't buy.

 

David.

[Les*1066]

I have never been able to understand why the buyer has to pay a premium at auction houses.

 

It is the sellers who are trying to make money, so surely it is down to them to pay any fees that might occur. If it wasn't for the buyers, there wouldn't be an auction house in the first place. People have numerous ways to sell their goods, but auction houses rely on buyers to turn up, yet they have the gaul to charge them for actually wanting to buy things.

 

It doesn't make any sense to me to make those buyers pay for the 'privilege' of going to an auction house.

[sandspider]

It does make Ebay seem like better value!

[rimfire4969]

My local auction only charges the seller about 15% plus the vat the buyers pays nothing, this is how it should be. Admittedly it's not a gun auction but they do have guns in their general sale and I have bought about 6 from there over the last 3 years or so.

 

30% is massive and not sure how the justify that.

[MartynGT4]

It's a bloody joke, all they do is knock up a glossy brochure, rent a venue, reel off some spiel and take bids on the day... no way is that worth the percentage they're charging. Sellers are conned into thinking they have to auction their stuff at the most prestigious auctioneers to get the best buyers, more fool them if you ask me. At the end of the day if people are prepared to pay silly money then they'll keep charging it.

 

People put too little a value on common sense if you ask me.

[Old farrier]

Hi birdaslip

You don't have to worry about paying the premium

I phoned them 7 times on Monday 2answerphones 5 different people all said they couldn't help me but would get the correct person to ring me back

It's now Thursday

Nothing

So potential bidder lost

So in my opinion there not worth a light

All the best

Of

[longspoon]

It's the same at some car boot sales, they have the temerity to charge you to go and look at booters gear, the stall holders or car booters are paying for the pitch, why charge potential buyers.....

[wildrover77]

This reminds me of the threads about rip of rfd's.

 

Perhaps those complaining about rip offs should set up in business and show us how it is done.

 

When every you actually learn to look at a set of accounts or run a business it is scary how small actual profit margins are. most business need to make a 25-50 gross margin to clear 5-10% profit

 

Exeryone see's a 50% gm and thinks businesses make a killing

Edited July 24, 2014 by wildrover77

[MartynGT4]

HOWEVER, you do have to factor the premium into your bid, just as everyone else does. If you think a gun is worth £200 and the market agrees, the bid will reflect the premium. The only real loser is the seller, as the hammer price will be lower taking into consideration the buyers premium.

 

Good point, I hadn't thought of it like that.

[aris]

If the seller is vat registered (a shop or dealer for instance) you will pay close to 50% premium. 20% vat on the hammer price, then 25% premium, and vat on the premium. I kid you not.

[keg]

As has been said already, if you don't like somewhere, take your custom elsewhere.

[birdsallpl]

That's correct. All you can do is vote with your feet. As I have on this occasion

[MartynGT4]

Yeah, I'll spend my £50k somewhere else.. #closecall

[aris]

Do secondhand guns not come under special scheme VAT, therefore no vat to pay on the purchase? If you look at the catalogue, the lots which VAT is applicable are marked as such. Most are not.

 

To add insult, you also pay 2% to buy said lot on a Credit card!

See above

It is complicated

 

http://www.thomasdelmar.com/Catalogues/as091209/vatnotes.html

[al4x]

It's a bloody joke, all they do is knock up a glossy brochure, rent a venue, reel off some spiel and take bids on the day... no way is that worth the percentage they're charging. Sellers are conned into thinking they have to auction their stuff at the most prestigious auctioneers to get the best buyers, more fool them if you ask me. At the end of the day if people are prepared to pay silly money then they'll keep charging it.

 

People put too little a value on common sense if you ask me.

I've a little knowledge of this auction house as it's one of our bigger clients. And you have it right except they own a lot of very expensive London property, employ a lot of people. Operate a warehouse so on top of printing brochures there is a bucket load of infrastructure behind it.

If you don't like it don't buy or otherwise factor it into your purchase. The majors the fees look shocking but there is a good reason sellers use them and that's because generally they make more than selling through a provincial auction house.

Personally I'd want to see stuff in person so I knew the photos weren't taken from an angle that hid anything.......... But that's another story altogether.

[birdsallpl]

This reminds me of the threads about rip of rfd's.

 

Perhaps those complaining about rip offs should set up in business and show us how it is done.

 

When every you actually learn to look at a set of accounts or run a business it is scary how small actual profit margins are. most business need to make a 25-50 gross margin to clear 5-10% profit

 

Exeryone see's a 50% gm and thinks businesses make a killing

Hi wildrover77. I would imagine there are quite a few on here that know how businesses run. Revenue has no relationship to profit we know. However to run a successful business you have to offer a good or service that people want at a competitive market price and control the costs of doing so. If you cannot control those costs at the rate required to generate a profit you are in trouble. Unless perhaps like Bonhams you have something above and beyond your competitors as an offering you're likely to win business. But as a client I don't see what it is. So to me it is a ripoff

[wildrover77]

Hi wildrover77. I would imagine there are quite a few on here that know how businesses run. Revenue has no relationship to profit we know. However to run a successful business you have to offer a good or service that people want at a competitive market price and control the costs of doing so. If you cannot control those costs at the rate required to generate a profit you are in trouble. Unless perhaps like Bonhams you have something above and beyond your competitors as an offering you're likely to win business. But as a client I don't see what it is. So to me it is a ripoff

Well if your opinion is correct then they will disappear.

 

If your opinion is not then they will continue to exist.

 

It you are not happy with them then use there competitors and help drive them under.

Edited July 25, 2014 by wildrover77

[al4x]

The thing is you can see their commission structure when you buy from shops most will be operating on a similar profitability. The sporting guns are one area you are liable to get more of a bargain than most as they can't ship anything needing a licence or more and more anything obsolete or not needing one. That really ****** the yanks off in particular. I see a lot of invoices from the majors and they would make most cry at the commission but a lot of their buyers are seriously wealthy. When like some you are spending millions with them it's amazing figures, and they will still slap you with storage if you don't collect fast enough and with some like Christies that goes up nearly as fast as the commission

[RossEM]

I've worked for a auction house in Buckinghamshire for several years, so I have quite a good understanding of how this works. We hold two Sporting sales per year, usually having 20 - 30 guns in the sale.

 

Firstly, I'd like to say to those who think buyer's premium is a rip off - all businesses aim to make money in any possible way they can. At auction, you often can purchase a gun at way below retail price, even when commission and VAT is taken into consideration. The 'mark up' that shops put on guns can be far more expensive for both vendors and buyers.

 

We do indeed work hard for the vendors, I am personally responsible for cataloguing the guns in our sales and it does take a lot of detailed inspection and research.

 

At the end of the day, you don't have to buy at auction and if you get stung by not taking commission into consideration, tough luck. But it's entirely possible to get huge bargains by buying at auction - you just have to make yourself aware of the process!

[RossEM]

Do secondhand guns not come under special scheme VAT, therefore no vat to pay on the purchase? If you look at the catalogue, the lots which VAT is applicable are marked as such. Most are not.

 

To add insult, you also pay 2% to buy said lot on a Credit card!

See above

Hi Jabb, as far as I'm aware, no secondhand goods are VAT applicable and at our place VAT is on the commission only.

[scotslad]

Never realised the% are so steep. Does put a lot on a gun. Been a while sinc i bought a motor at a mart but sure only paying a couple of % there.

 

VAT will depend on if the VAT was paid initailly. ie When gun was bought brand new first owner pays the vat and so no vat on that gun (van, quad, tool etc) but if the first buyer was a business and claimed the vat on the gun, vat will not have been paid so vat willl need to be charged but only once

[RossEM]

We're acting for both parties, yes, but I don't believe that constitutes a conflict. We want to get the best possible price for the vendor - the buyer should be prepared to pay!

[birdsallpl]

At the end of the day, you don't have to buy at auction and if you get stung by not taking commission into consideration, tough luck. But it's entirely possible to get huge bargains by buying at auction - you just have to make yourself aware of the process!

 

Hi RossEM

 

I agree you can get some real bargains at auction including commission, that is the name of the game and I will keep using other houses if I need another gun. But it's the 25% plus VAT which I find outrages.

Out of interest do you know why sellers of guns use auction houses because they can't get much from most guns sold. I can understand the person who is selling Grandad's pair of H&H etc and old stock clearance for RFD's, but do general joe public bother. It's the last place I'd sell a gun but the first place I look to buy.

[Scully]

While not attempting to derail the thread ( I'm possibly the only one on this forum affected by this anyhow ) I'm in a similar position as I sell original artwork to galleries. Some of the 'giftshop' galleries aren't too bad as they will only charge the artist 25 -30% commission, but the commercial galleries can charge as much as 35-38% commission plus vat, with some of the London galleries charging 50% plus vat. This means that it can be very easy to price yourself out of a sale when you take into account the galleries commission, plus vat, plus the frame and materials (though tax deductible) and then pay your own income tax, this is before you price the actual work itself. Most artists, even the well known established ones, can often only receive a third of the actual sale price.

But if we want to make a sale we have no choice.

A company in Chelsea wants me to get involved in their annual Art Fair and sends me all the relevant literature on a regular basis. It is 'commission free' but the cost of a 4 sq metre stand starts at £2,500 for the weekend. There is then the logistics involved of transporting all my paintings to London, plus the cost of that return transport, plus digs,plus food. And that's without making a sale.

Everyone wants their cut; (often at the expense of the manufacturer) it's the way of the world. The auction houses need the buyers and sellers as the galleries need the artists, but it works both ways; it's perhaps the balance that needs addressing.