Business

Hiring An Auction Company

Peter

 

Estimating your assets worth:

Typically, one of the first questions that a company operator will ask me is,”how much will the assets attract at an auction”. After taking the opportunity to reassess the assets, the auctioneer should provide the customer a conservative estimate of the deal based upon his experience and the present market trends. It is important that the firm give realistic expectations so that the seller can make informed decisions based on their own best interest.

Compensation and Expenses:

Is the organization you are thinking about working for you or against you? The agreement that you decide may determine this.

A company owner should carefully consider the way the auction company is compensated. The most usual commission arrangements include: direct commission, outright purchase of assets, guaranteed foundation with a split over to both auctioneer and seller, guaranteed foundation with anything above going to auctioneer or a flat fee arrangement.

In a straight commission arrangement, the business is paid an agreed upon portion of the entire sale.

In an outright purchase agreement, the auctioneer only becomes your end purchaser. The company purchases your assets and relocates farm equipment auctions Georgia. While this can be an alternative in certain unique situations, keep in mind that they will wish to obtain your assets in a very reduced cost to create a profit at a later date.

Cottons Chartered Surveyors Auctions | Estate Agents Birmingham

At minimum foundation guarantee, the auction provider ensures the seller that the auction will create a minimum amount of earnings. Anything above that number either goes to the auction business or split with the seller. Even though a seller might feel more comfortable doing an auction knowing that he is guaranteed a minimum amount because of his sale, keep in mind it is the best interest of the auction business to secure a minimum base cost as low as you can to decrease their financial liability to the seller and secure higher reimbursement for the sale.

At a flat fee structure, the auctioneer agrees to show up to your sale and call the auction. There is not any incentive for the auctioneer to get the lowest deals for your resources. The auction business is compensated whatever the outcome of your sale.

What’s the best alternative for business owners? In my experience, an agreed upon directly commission arrangement. This puts the obligation on the auction company to offer the very best outcome for everyone involved. There’s an incentive for the auction company to work for both parties, setup and run a specialist sale, receive the highest bid and sell every item on the inventory. Successful auctions interpret to a greater bottom line for both the vendor and the auction business.

Auction Expenses:

In most auction arrangements the expenses to run an auction are passed to the seller. In the event the auction company pays for the expenses, it is simply consumed in higher commission prices.

All costs should be agreed upon in advance in a written contract. Typical costs include the costs of advertising, labor, legal fees, travel, gear rentals, protection, printing and postage. A respectable auction firm will be able to estimate all costs based upon their experience in previous auctions. An agreement should be real costs charged as expenses, not an estimated amount.

Advertising is typically the highest price in running an auction. The auction company should set up an advertising campaign that will promote the sale to its best advantage and not overspend to simply promote the auction business.

Once the auction is complete, the auction business should offer a comprehensive breakdown of expenses to the seller, such as copies of receipts inside the auction summary report.

 

What’s a buyer’s premium? If you attend auctions frequently, you’re extremely familiar with this term. The auction company charges a commission to the purchaser when they purchase an item at auction.

The buyer’s premium has existed since the 1980’s and is standard auction clinic. It was initially used by auction houses to help offset costs of running mortar and brick permanent auction centers. Since that time, it has spread to all aspects of the auction market. It’s notable in online auctions and allows auction organizations to cover added expenses incurred from online sales.

It’s the responsibility of the auction business to provide clear disclosure of the buyer’s premium to both the buyers and the vendors. Those not knowledgeable about auctions are usually taken back from the buyer’s premium. They looked upon it as an under handed manner for the auction company to earn more money. Reputable auction companies provide whole disclosure within the auction contract, advertising and bidder registration.

Usually, an auction company will charge online buyers a greater buyer’s premium percentage compared to people attending an auction in person. Extra fees are incurred with internet bidding and are billed accordingly to online buyers. This gives the seller a level playing field for both internet buyers and those attending the auction in person. Without the buyer’s premium, there’s no means to do this.

Pre-Sales:

We have been there. We’re excited about attending an auction just to find that some items were sold before the auction date.

As an auctioneer with over thirty-six years of expertise, I can honestly state that pre-sales will hurt an auction. When a business makes the decision to liquidate their assets, it’s simple to market off high-end pieces of gear through internet resources, gear vendors or to other businesses. The seller receives immediate cash and avoids paying a commission to an auction business.

Auctioneer’s find themselves appearing to behaving in a self-serving capability when potential customers say they’re planning to sell off parts of their stock prior to an auction. It is hard not to consider the auctioneer’s commission if they warn you to not pre-sell anything. Yes, the auctioneer wants to make a commission on these sales but it’s more essential that the auctioneer take care of the purchase from potential negative backlash that comes from pre-selling. The purchasing public understands when an auction has been”cherry picked” prior to the purchase and it reflects in their bidding. It becomes a purchase of”leftovers” which affects prices.

A purchaser who purchases prior to the auction ordinarily doesn’t attend the purchase. They bought equipment at a good price with no contest. If they do attend the auction, they are inclined to let others know of their great pre-sale purchases that again, affects prices and the overall excitement of the sale.

It’s important to see that auctions work best with an entire inventory. You want competition on your high end gear. The easy to sell items make it feasible to gain respectable prices for hard to market things.

When a company owner decides to liquidate their gear resources, there is only one opportunity to do it right. Hiring a respectable auction business will assist you with a professional, systematic and timely liquidation.