In auctions, the buyer's premium is a percentage additional charge on the hammer price of the lot. It is made by the auctioneer to cover his 'administrative expenses'.
In the fine art sector major auction houses have made this charge for some time, with premiums in the region of 10%-20%. In the real estate sector the premium, if charged at all, is much less (2%-2.5%). However more recently in the UK foreclosure properties have been offered without fee to the seller but with a substantial buyers premium of 10%.
The amount of the buyer's premium will normally be stated in the auction house terms and conditions
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