How to Compare Industrial Auctioneer Proposals: A Seller's Checklist

If you are selling industrial equipment, you will often receive proposals from more than one auctioneer, and the natural instinct is to sign with whoever quotes the lowest commission rate. That is usually the wrong number to optimize. What actually lands in your account is net recovery: the gross hammer proceeds, minus the seller's commission, minus reimbursable expenses, and shaped by how the buyer's premium and the auctioneer's real buyer reach affect the prices your equipment brings. A low rate on a poorly marketed sale can net you far less than a higher rate on a sale that draws the right bidders. This guide breaks down how industrial auctioneer fees are built, the alternative structures you may be offered such as expense reimbursement, minimum guarantees, and outright purchase, and a side-by-side checklist for comparing competing proposals on the terms that decide your settlement check. For a specific proposal on your equipment, call KD Auctions at 480.455.3910.

The Two Revenue Streams

Every industrial auction generates revenue through two separate channels. Understanding both is essential for evaluating your net recovery and for comparing competing auctioneer proposals apples-to-apples.

Seller's Commission

The seller pays a negotiated percentage of the gross hammer price (the final bid price at which each lot closes) to the auctioneer. This is deducted from your proceeds before you receive your settlement check. Rates vary significantly by deal size:

• Large plant closures ($500K+ in expected gross proceeds): the strongest commission economics for the seller. For very large engagements, some auctioneers waive the seller's commission entirely.
• Mid-size liquidations ($100K–$500K): commission rates fall between the two extremes, driven by the specifics of the deal.
• Small consignment lots (individual machines or small collections): the highest commission rates, because per-item work is high relative to proceeds.

Actual rates are always negotiated based on the specific deal. An auctioneer quoting a very low commission rate on a deal they expect to perform poorly is no bargain. Net recovery, not commission rate, is the correct comparison metric.

Buyer's Premium

The buyer pays an additional percentage on top of the hammer price, directly to the auctioneer. For example: a CNC lathe closes at $30,000 hammer price with an 18% buyer's premium. The buyer pays $35,400. The seller receives their settlement based on the $30,000 hammer price, minus the seller's commission. The buyer's premium goes entirely to the auctioneer and does not reduce the seller's net. In industrial auctions, buyer's premiums typically range from 15% to 20%.

Combined Fee Example

Using a $100,000 lot as an illustration:

• Hammer price: $100,000
• Buyer's premium at 18%: $18,000, paid by the buyer to the auctioneer on top of the hammer price
• Seller's commission: a negotiated amount tailored to the engagement, quoted upfront, with most sellers paying nothing out of pocket
• Buyer pays: $118,000 total
• Seller nets: the hammer price minus the agreed commission and any expenses

The seller's out-of-pocket cost is only the commission, not the buyer's premium. This is why comparing commission rates alone without understanding buyer's premium is misleading.

Other Fee Structures to Understand

Expense Reimbursement

Most auctioneers charge the seller for direct costs of the auction: photography, cataloging, advertising, internet listing fees, and sometimes labor for inspection setup and removal. These are separate from the commission. Always ask for an itemized estimate of expenses before signing an engagement.

Minimum Guarantee

Some auctioneers offer a guaranteed minimum net to the seller. They absorb downside risk if auction results fall short of expectations. This shifts risk to the auctioneer and typically comes with a higher commission rate or a lower guarantee number. Useful for sellers who need certainty of close over maximum recovery.

Outright Purchase

An auctioneer or dealer purchases the equipment outright from the seller at a negotiated price. No commission structure applies. The auctioneer takes all upside and downside. Provides maximum certainty of close; typically results in below-auction-market net to seller.

What to Compare When Evaluating Auctioneer Proposals

• Projected gross proceeds: what does the auctioneer actually think your equipment will sell for?
• Net to seller after all fees and expenses, not commission rate alone
• Buyer's premium charged: high buyer's premiums suppress hammer prices as buyers build premium into their bids
• Buyer reach: how many registered buyers will actually see and bid on your equipment?
• Sector expertise: does the auctioneer have relationships with the specific type of buyer your equipment requires?
• Track record: can they show you comparable results from similar equipment in the current market?

At KD Auctions

We structure every engagement individually based on deal size, equipment type, and seller priorities. We do not publish a standard commission rate because the right structure genuinely depends on your situation. For a specific proposal on your equipment, whether a single machine, a department, or a full plant closure, call KD Auctions at 480.455.3910.