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PostPosted: Wed Dec 19, 2007 12:29 am 
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Hello Fellow Auctioneers,

One of my coworker's called last night and stated that he knows of 2-different individuals with some great items that could be consigned to our February antiques & collectibles auction. He then stated that he thought that he should be paid out of the auction commission for refferring the people to me instead of him listing the items for the sellers on his ebay auction site. I answered the question by stating that as an auctioneer, I always work for my client, the seller first, not for the middle man first. I am not against paying a refferal, however I need to know what the seller has to sell and how it would need to be marketed prior to me quoting a commission rate to to seller to start with.

Can any auctioneers shed any light on how they go about paying for a referral for antiques & collectible items for an antique type auction and what there experiences have been in doing so?

Thank you in advance for any consideration that this request may be given.

Mike Murphy, auctioneer
Delavan, WI


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PostPosted: Wed Dec 19, 2007 5:44 am 
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Location: Athens, TN
Mike, I would check my state laws to see if I could legally pay a referral fee to anyone other than a licensed auctioneer. I know it's done all the time, but I wouldn't want something that I may have to deal with later. Referral fees and commission split is somewhat of a grey area and your licenseing board may frown upon this.

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Danny E. Ratcliff Auction & Realty, LLC
300 B West Madison Avenue
Athens, TN 37303
http://www.ratcliffauction.com
e mail: ratcliffsells@mindspring.com

Phone 1-888-746-0164


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PostPosted: Wed Dec 19, 2007 8:47 am 
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Location: Columbus, Ohio
Mike, great question. As Danny will agree with, there may also be different standards for real estate and personal property referrals.

In Ohio, there is nothing that prohibits a referral fee for PP. On the other hand, a licensed RE agent can't pay a non-licensed RE agent part of their commission.

I'm always willing to pay a referral fee if 1> the business actually happens and 2> the referrer ask for the fee and we decide what it is upfront. Typically, I pay about 5% for personal property referrals, but have worked out other arrangements as well.

It is a gray area, indeed. It depends a bit on how you treat the fee on your own records. For instance, you can legally gift anyone money that you want to. I don't know what this limit is in 2007, but last year it was $11,000, I believe. But, if you gift someone money, then you can't deduct it. If you're going to deduct it, you have to 1099 the person, which should be discussed upfront. In that case, you're creating sort of an ind. contractor status and that may be looked upon as sharing commissions as this really isn't any different than when you spilt a commission with another RE agent.

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Greg Belhorn, President & Auctioneer
Belhorn Auction Services, LLC
Columbus, Ohio
(614) 921-9441
http://www.belhorn.com


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PostPosted: Wed Dec 19, 2007 9:17 am 
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Location: Adrian, Mi.
I don't normally pay a referrall fee, nor do I ever expect one. Usually the profit margin just isn't there.

There is for me; an exception for every rule, and there may come a time that I might want to pay a referral fee.

Lyn Liechty, Auctioneer


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PostPosted: Wed Dec 19, 2007 12:30 pm 
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Appreciate your your input Danny, Greg and Lyn.

When someone asks me who do you use for your auto mechanic? I do not call up and the mechanic first and ask how much he can cut me in for by sending someone to him with their car repairs. Or, Can you recommend a good Vet for our pets? I normally do so based on helping the person with their needs and know that I am putting my reputation as a friend and as a professional on the line in doing so.

In Wisconsin it is OK in our State regulations to pay non-auctioneers referrals on Personal Property type auctions.

I have another question. Why couldn't the seller pay a flat fee referral to the ref
errer directly if they wish to do so (example $25.00)? Could I wright two checks with the auction settlement? One for the seller and one to the referrer as an expense from the auction proceeds and then give both of the checks to the seller and let the seller hand the referrers his check directly themself?

One of the reasons I do not think that a referral fee should not be a percentage of the auction commission is that you are then disclosing the auction sale numbers
to someone outside of the auctioneer's contract with the seller. This could violate confidentiality with the seller.

I am looking for ideas that make sense.

Does any one else wish to respond?

Thank you.

Mike Murphy, auctioneer
Delavan, WI


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PostPosted: Wed Dec 19, 2007 1:31 pm 
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Location: Adrian, Mi.
Mike Murphy wrote:
Appreciate your your input Danny, Greg and Lyn.


I have another question. Why couldn't the seller pay a flat fee referral to the ref
errer directly if they wish to do so (example $25.00)? Could I wright two checks with the auction settlement? One for the seller and one to the referrer as an expense from the auction proceeds and then give both of the checks to the seller and let the seller hand the referrers his check directly themself?

One of the reasons I do not think that a referral fee should not be a percentage of the auction commission is that you are then disclosing the auction sale numbers
to someone outside of the auctioneer's contract with the seller. This could violate confidentiality with the seller.



Mike,

You can do pretty much whatever you wish as long as it's legal and covered in the contract.

I think I like your idea of making payment as long as the seller is aware and gives consent.

Lyn Liechty, Auctioneer


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PostPosted: Wed Dec 19, 2007 1:39 pm 
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Location: VAN BUREN, ARKANSAS
FINDERS FEES ARE PAID ALOT IN OUR AREA. I DON'T KNOW IF IT IS WRIGHT OR WRONG BUT, IT IS A PART OF THE BUSINESS IN OUR AREA. TO PAY A FINDERS FEE ON SAY A $1,000 WORTH OR ANTIQUES MAYBE NOT. BUT TO PAY A FINDERS FEE TO GET THAT $100,000 FARM AUCTION OK. IT IS LEGAL TO PAY FINDERS FEE ON PERSONAL PROPERTY IN OUR AREA BUT IT IS "NOT LEGAL" TO PAY A FINDERS FEE ON REALESTATE.


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PostPosted: Wed Dec 19, 2007 9:35 pm 
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Location: Columbus, Ohio
Mike Murphy wrote:
When someone asks me who do you use for your auto mechanic? I do not call up and the mechanic first and ask how much he can cut me in for by sending someone to him with their car repairs. Or, Can you recommend a good Vet for our pets? I normally do so based on helping the person with their needs and know that I am putting my reputation as a friend and as a professional on the line in doing so.


Mike, you bring up a good point and I think it proves the value in offering referral fees. If your mechanic and/or vet sent you some sort of thank you (gift box of candy, flat $25 check, coupon for services, % of referral proceeds), would you be more or less likely to recommend that person in the future? I'm guessing you would.

The bottom line is this...I want to grow my business. If, as a way of saying "thank you" that means paying a referral fee to someone that refers business to me, I don't mind doing it. Chances are it will lead to more business down the road and it is money well spent. Now, the "fee" may be a $50 gift card as a thanks, or a check for X%, or a box of nuts or a bottle of wine, but I can tell you anytime I've done any of the above, it's led to more business in the long run.

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Greg Belhorn, President & Auctioneer
Belhorn Auction Services, LLC
Columbus, Ohio
(614) 921-9441
http://www.belhorn.com


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PostPosted: Thu Dec 20, 2007 1:49 pm 
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Business is business.

My Motto:

There is no better way to say thank you than with a check.

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William F. Burke, CAI - AARE Auctioneer

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Secrets of an AARE Auctioneer
http://www.aareauctioneer.com
The Most Comprehensive & Complete Guide to selling real estate at auction


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PostPosted: Fri Dec 21, 2007 1:46 pm 
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Hello All

I appreciate everyones input on this.

It occurred to me that when my coworker lists items for people as an Ebay Trading Assistant, that Ebay does not pay him anything for him referring his customers to have him sell for them on their site. Ebay charges for their services and he must still do the work of listing and arranging shipping for himself. It is interesting to note that many of our older best paying buyers do not have a computer, do not buy on Ebay and they love to attend traditional live auctions.

Thank you.

Mike Murphy, auctioneer
Delavan, WI

http://www.murphyauctions.com


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