Buyer’s premium: a plain-language definition
A buyer’s premium is a fee added to the winning bid. If an auction has a 5% buyer’s premium and the winning bid is $200,000, the premium is $10,000, making the bid-plus-premium amount $210,000. Property-specific terms may use a different percentage, a fixed amount, or a minimum premium.
The premium is separate from Auction14’s one-time bidding membership. Membership unlocks bidding access; the buyer’s premium belongs to a particular property transaction and is only relevant if you win that auction.
How to calculate the premium before bidding
Read the property’s premium rule carefully. A term such as ‘5% or $2,500 minimum, whichever is greater’ means a $30,000 winning bid would carry the $2,500 minimum rather than $1,500. A $100,000 winning bid would carry $5,000.
Work backward from your all-in budget. If your maximum for bid plus a 5% premium is $210,000, the bid portion cannot exceed $200,000. Then subtract other expected costs before deciding whether that number still works.
What the buyer’s premium does not include
The premium is not a complete closing estimate. Deposits, transfer charges, title work, legal fees, loan costs, taxes, insurance, repairs, utilities, and other disclosed charges may remain separate. The listing and transaction documents—not a generic calculator—control the actual obligation.
- Winning bid
- Buyer’s premium
- Property-specific fees or deposits
- Closing, title, legal, tax, and financing costs
- Repairs, security, utilities, and holding costs
Use the premium to set a disciplined maximum bid
Enter several possible bid amounts into the property calculator before auction day. Save the all-in total for your walk-away number and leave room for uncertainty. When the auction is moving quickly, you should already know the total cost of the next bid.
Auction terms and local law control every transaction. Use this guide as a planning framework and obtain property-specific legal, title, tax, inspection, and financing advice when needed.
Quick answers
Frequently asked questions
Is the buyer’s premium included in the displayed bid?
Usually it is added to the winning bid, but the property’s terms control. Use the listing calculator and read the terms before bidding.
Is the Auction14 membership fee a buyer’s premium?
No. The membership is a one-time account fee for bidding access. A buyer’s premium is a separate property-transaction charge added to a winning bid when disclosed.
Does every auction have the same premium?
No. The percentage, minimum, fixed amount, or absence of a premium can vary by property and auction terms.
