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Writer's pictureMike Brandly, Auctioneer

Can auctioneer say, “We don’t charge a buyer’s premium?”


A large nationwide auction firm conducts real estate auctions, and charges their buyers a 10% buyer’s premium.

A smaller regional auction firm conducts real estate auctions and does not charge a buyer’s premium.

  1. The large nationwide firm notes in their advertising, “10% buyer’s premium applies.”

  2. The smaller regional firm notes in their advertising, “No buyer’s premium.”

All okay here? I think so.

In fact, it would appear both auction firms are acting in compliance with the law and all ethical parameters.

Most states require that if an auctioneer is charging a buyer’s premium, that such is noted in their advertising. Although not required by any state law, an auctioneer not charging a buyer’s premium would have a similar common law duty to note such in their advertising.

Charging a buyer’s premium without disclosure might be interpreted as a “bait and switch” tactic. “Come to our auction … and now that you’re here and have purchased, here’s your invoice with our 10% up-charge.”

Similarly, not charging it without disclosure might be interpreted as not fulfilling fiduciary duty. Bidders — assuming there is a buyer’s premium — go to another auction instead where it’s advertised “no buyer’s premium.”

Let’s say the large nationwide firm is upset by the smaller regional firm because they advertise “No buyer’s premium,” (attractive to buyers — they pay less?) to differentiate themselves from the larger nationwide firm. Is there a valid claim here? Almost certainly not.

Or, let’s say the smaller regional firm is upset by the large nationwide firm because they advertise “10% buyer’s premium,” (attractive to sellers — they pay less?) to differentiate themselves from the smaller regional firm. Is there a valid claim here? Again, almost certainly not.

Tort law which involves libel or slander requires that the communication (in writing or spoken) be false information. In these cases, these firms are dispensing correct (true) information. So, no slander and no libel here.

Generally, any auctioneer could advertise that he “does” or “doesn’t” charge something. For instance, we do charge for parking, or do not charge for parking; we do charge for a bid number, or do not charge for a bid number …

I’m unclear on the details, but it appears that some larger auction firms charging buyer’s premiums are filing complaints and/or lawsuits against auctioneers who are advertising that they don’t charge a buyer’s premium.

False advertising is regulated federally by the Federal Trade Commission. As well, each state has laws relating to unfair competition.

It would appear that if advertising is true, and not misleading, that it is certainly permitted under the laws in the United States.

If I had to pick a side, I would choose an auctioneer’s right to advertise he doesn’t charge a buyer’s premium (if he doesn’t) over someone claiming he can’t advertise that fact due to their charging a buyer’s premium (if they do.)

If litigated, and some other conclusion is reached, I suspect an appeal would be prudent — for the benefit of all auctioneers.

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.

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