Buyer's premium meaning, and the other fees at auction
A buyer's premium is an amount added to the hammer price at auction, paid by the winning bidder as the auctioneer's compensation. Common Hour's auction terms publish a standard of twelve percent of the hammer price, except as modified in writing for a particular auction. Commissions and fees are not set by law and are fully negotiable.
What a buyer's premium is
The hammer price is the winning bid. The buyer's premium goes on top of it, so the winning bid is not the full amount you pay.
Common Hour's auction terms set the standard premium at twelve percent of the hammer price, added to the hammer price, except as modified in writing for a particular auction. The premium is the auctioneer's compensation.
Commissions and fees are not set by law and are fully negotiable.
Who pays the premium
The winning bidder pays it. If you bid and do not win, you owe no premium.
Sellers deal with a separate number. Buyer's premiums and seller's commissions are both disclosed in writing.
Commissions and fees are not set by law and are fully negotiable.
Example only: a $100,000 hammer price
This example uses round numbers to show the arithmetic. It is not a real sale, and it does not predict what anything will bring. Closing costs and sales tax, where they apply, are separate from these numbers.
- Hammer price: $100,000
- Buyer's premium at twelve percent: $12,000
- Hammer price plus premium: $112,000
Commissions and fees are not set by law and are fully negotiable.
How it differs for real estate and personal property
Real estate: the premium also serves as the non-refundable earnest money. It is due to the escrow agent within 24 hours of the close, and the balance is due at closing. In the example above, the $12,000 would go to the escrow agent first and the remaining $100,000 would be due at closing.
Personal property: the hammer price plus premium is due in full within 24 hours of the close, and items are released after payment clears. In the example above, the full $112,000 would be due within 24 hours, plus any sales tax.
Commissions and fees are not set by law and are fully negotiable.
Cooperating broker fees
Cooperating broker fees, if any, are paid out of the buyer's premium. They are not added on top of it.
To be eligible for a co-op fee, a buyer's agent must register the client under the Realtor Co-Op Program at least 48 hours before the auction closes. If you are working with an agent, ask whether that registration is done.
Common Hour pays a buyer's agent commission and a seller's agent commission. Every bit of it is negotiable and disclosed.
Commissions and fees are not set by law and are fully negotiable.
Sales tax on personal property
Tennessee sales tax is collected on personal property unless the buyer gives a valid resale or exemption certificate. Real estate is not subject to sales tax.
If you are not sure whether a certificate applies to you, ask your CPA.
Commissions and fees are not set by law and are fully negotiable.
Late pickup handling fee
Personal property must be picked up in the published window. The late pickup handling fee is $100 per day for up to three days. After that, the property is deemed abandoned.
The buyer arranges transport and labor. Risk of loss passes at the hammer, so plan your pickup before you bid.
Commissions and fees are not set by law and are fully negotiable.
Where a sale's Special Terms change the numbers
This page describes the standard in Common Hour's auction terms. A sale's Special Terms can change it in writing, including the premium percentage, and where they do, the Special Terms control. Read them before you register.
Commissions and fees are not set by law and are fully negotiable.