Are auctioneers just plain greedy?

maninthestreet

So who does the auction house work for, if they are paid by both the seller and the buyer?

Andy_L

Is the cost of the Auction house more or less than the cost/reduced price you'd get selling it privately/ebay/jewlers/cash converters?

stephen77

Hoof_Hearted wrote: »

Don't know, but an awful lot....

But if we do not know. How do we know they are profiteering?

I do not know the answer.
Once there over heads paid, tax etc. They might not have huge amount of money left over.

Also its unlikely to be a fixed income. Next month may be a quite month etc.

jamesmorgan

maninthestreet wrote: »

So who does the auction house work for, if they are paid by both the seller and the buyer?

The auction house works for both parties. Services to the seller are fairly obvious. Services to the buyer include ensuring goods are accurately described, providing facilities for pre-viewing goods, providing facilities on the day of the auction (rooms, parking etc). Whether they provide services equally to both parties is harder to determine. The bottom line is that the total commission is around 30%. From a purely financial perspective it doesn't really matter how this is split (eg if goods+commission=£130, it either sells at £130 and seller pays £30 commission, or it sells at £100 and buyer pays £30 commission). From a psychological perspective it makes sense to split the commission in half. If the buyer was charged 30% the tendency would be to go other auction houses that charged buyers less (and sellers more). If the seller was charged 30% the reverse is true.

It is interesting to note that Ebay don't charge buyers anything yet, but I wouldn't be at all surprised to see this as the next evolution in their charging model. Some of their competition (eg Preloved) already make much of their money from buyers rather than sellers.

Azari

jamesmorgan wrote: »

It is interesting to note that Ebay don't charge buyers anything yet, but I wouldn't be at all surprised to see this as the next evolution in their charging model.

I can't see that happening.

The psychological effect of making another (considering p&p) addition to what buyers have to pay would negate any benefit in lowering seller fees (although knowing fleabay are they probably wouldn't bother doing that).

People already make enough fuss about p&p charges.

stephen77

ANother auction house to compare with "
Sotheby’s charges a commission known as a “buyer’s premium” of 20 percent on the first $100,000 and 12 percent on the rest."

Well they charge more than sotherbys. However 20% of 100,000 is a lot more than 30% of 300.

stephen77

If you were shifting large amount of products every week through the auction house.
You may get a better rate commission.

custardy

Hoof_Hearted wrote: »

No, I am aware of its value.

well pick a street corner and sell it
once your buyer arrives then you have no fee's

PasturesNew

I'd set up an auction house except .... with a room of people looking at me I'd miss 3 flicks of the hand, stutter and end up banging the hammer down and saying "sold" as the man in the corner scratched his bum.

I'd be useless at it.

Bit of a nice doss though .....

eddddy

An economist might say that competition and 'the free market' would ensure that auctioneers don't make excessive profits.

e.g. if an auction house is making massive net profits by charging 30% commission, then someone else will see the profit opportunity and set up an auction house nearby charging 28% commission. And another will come along charging 25% commission.

Then the original one will have to cut their commission, or go bust.

(Which is similar to what happened in the airline industry, for example. Budget Airlines came along offering lower prices, so the other airlines eventually had to cut prices to compete.)

As this isn't happening with the auctioneers, perhaps they are not really making massive net profits.