If you’re new to online auctions or simply want to understand the process more clearly, a few key terms can make all the difference. Buyer’s premiums, reserve prices and max bids are central to how auction platforms work. With this guide, JPS Chartered Surveyors aims to help first-time bidders, trade buyers, resellers, business owners, and the general public feel more confident and informed before they place a bid.
What is a Buyer’s Premium?
The buyer’s premium is a fee added to the final hammer price of a lot. This is standard across the auction industry and helps cover the operational costs of running the sale.
At JPS, the rate depends on the auction type:
- General auctions: 18% buyer’s premium
- Vehicle auctions: 10% buyer’s premium
VAT is usually applied to both the hammer price and the buyer’s premium. However, there are exceptions. Certain lots may be VAT-exempt on the hammer price, so it’s important to check the individual lot description for clarity.
Understanding the buyer’s premium helps you calculate your true budget. For example:
Hammer price: £100
Buyer’s Premium (18%): £18
VAT (if applicable): Added on top of hammer and BP
Your invoice will show a full breakdown, so you always know exactly what you’re paying.
What is a Reserve Price?
A reserve price is the minimum amount the seller is willing to accept for the asset. It ensures that the lot is not sold for less than its minimum agreed value and is an important protective measure for sellers.
In auctions, you may see terms such as:
- “Reserve not met” – bidding is currently below the minimum price.
- “With reserve” – the lot has a minimum price attached.
- “Sold subject to approval” – if bidding ends below the reserve, the seller may choose whether to accept the highest bid.
Reserved exist for several reasons. In many cases, it’s to safeguard the asset’s value or ensure a fair return. However, some reserves are set because the asset is still subject to finance or an outstanding agreement. In these situations, the reserves ensure that the sale covers any remaining financial obligations before the asset can be transferred to the buyer. This is particularly common with vehicles, machinery or equipment that may have been purchased through financial agreements.
If a reserve is not met, it doesn’t necessarily mean that item can’t be sold. We always send the highest bids to the vendor/client, and they may decide to accept the highest bid. In these cases, we will contact you after the auction to confirm whether you are still interested before any sale is agreed.
Reserves ultimately help maintain fairness and protect both sellers and buyers from unrealistic pricing.
What is a Max Bid?
Through our bidding system, most of our auctions allow you to place a max bid, also known as auto-bid or proxy bidding. This is a helpful feature for anyone who can’t monitor the auction continuously.
When you enter a maximum amount:
- The system automatically bids on your behalf
- Your bid increases only when someone else places a higher bid
- Your maximum limit is never exceeded
- You remain in the running even if you’re away from your device.
Your max bid can be increased at any moment. This is especially useful in timed auctions where multiple lots close within seconds of each other or where bidding actively increases sharply near the end.
Understanding “Sold as Seen”
All items sold through JPS are sold as seen, with no guarantees or warranties. This is standard practice for commercial auctions, and it’s important that buyers fully understand what they are bidding on.
To support informed decisions, we strongly recommend:
- In person viewings, where available
- Online viewing via video call, if you cannot attend in person
- Carefully reviewing all photographs, descriptions and condition notes
- Speaking with our expert team to clarify any uncertainties.
Viewing assets beforehand, physically or virtually, ensures full transparency and helps minimise surprises at collection.
Why Understanding These Terms Matters
Knowing how buyer’s premiums, reserved and max bids work allows you to bid more confidently and avoid unexpected costs. It helps you:
- Set accurate bidding budgets
- Understand the financial commitments involved
- Use auto-bidding strategically
- Make informed decisions, whether you’re purchasing a single item or multiple lots
At JPS Chartered Surveyors, we’re committed to making the auction process clear, transparent and accessible. If you ever need guidance, our team is always on hand to help.