Buyer's Premium has got to be more and more of a norm for many auctioneers, so, who does this benefit, Buyer? Seller? or the Auctioneer?
Let me start by saying that as a seller's agent, you have a fiduciary DUTY to do the very best job for your seller, that means keeping your client out of harms way, keeping confidential information confidential and getting the most money for the client.
For obvious reasons I cannot say the brokers name,but,here is a quote as to buyer's premium ” yeah buyers don’t like it but they get used to it, they figure out to bid 10% under their top dollar”. So, he has stated that they know the property is going to bring 10% less to compensate for the buyer's premium, how is getting 10% less for the seller in the seller's best interest?
I have yet to talk to one buyer who likes buyer's premiums, and every last buyer I have visited with says the same thing, we keep our highest and best offer 10% less than they would at auction without a buyer's premium.
Now-10% Buyers Premium; I have yet been able to figure out why the auctioneer needs 10% at a real estate auction, rates vary, but the norm is 5-6%. Why are these companies charging double commission rates to the buyer? From what I can tell, there is very little marketing offered by these companies, yet charge double rates?
So, let's look at a $200,000.00 deal for instance, 5% commission is 10,000.00, 10% is 20,000.00. If the seller paid a 5% commission (10K), net would be 190k, if the buyer holds back 10% of his top end at a buyer's premium auction, seller net is 180K. The sales pitch is- “they wont charge the seller a commission” -but at the end of the sale, it is the seller who pays a much larger price, and the auctioneer gets double commission... Do you think the seller is well served?
Conclusion: Pretty obvious, this is a system that only serves the auctioneer, not the buyer and certainly not the seller, double commission, half the service.
Real estate is a very competitive world, apparently, if you have little to offer your clients like service, a regular advertising schedule, professional execution of a sale, you put it off on the buyer, and cost the seller. Think about this....