Posted By:
bruce DorskindSotheby's increases buyers fee
Kira Bindrim
August 23. 2007 3:36PM
Auction house Sotheby’s said Thursday that it is raising the buyer’s fee charged on smaller ticket auction sale by 5% to 25%.
Effective Sept. 1, the buyer’s premium, which is paid to the auction house, will apply to sale prices up to $20,000, Sotheby’s said in a Securities and Exchange Commission filing.
The buyer’s fee will remain at 20% for sale prices between $20,000 and $500,000 and 12% for any sale above $500,000.
The move matches a similar increase by rival auction house Christie’s International. On Aug. 3, Christie’s raised its buyer’s premium to 25% for items under $20,000. The two auction houses tend to move in tandem. Sotheby’s originally bumped its buyer’s premium to 20% in December 2004 -- Christie’s followed suit one month later.
Sotheby’s also disclosed in its SEC filing that outstanding auction guarantees have reached $378.1 million, 37.5% higher than the $274.9 million reported on Aug. 7. Another $95 million are earmarked for pending offers, most of the company expects to realize during the second half of the year. Earlier this month, Sotheby’s management set an annual auction guarantee limit of $500 million.
Auction guarantees are made to ensure a minimum price on a sale. Sotheby’s is generally entitled to a share of any proceeds above the minimum price, or must pay the difference if an item sells below its minimum. Strong auction guarantees typically translate into stronger profits.
Earlier this month, Moody’s upgraded its long-term debt rating for Sotheby’s, citing the company’s strong operating performance and a 48% increase in second-quarter profits, which reached a record $107.3 million.