Wiktionary
n. A bonus paid by a buyer in addition to normal payments or cost. Usually such payment is made to an auctioneer or merchandise club to cover administrative costs.
Wikipedia
In auctions, the buyer's premium is a percentage additional charge on the hammer price (winning bid at auction) of the lot that must be paid by the winner. It is charged by the auctioneer to cover administrative expenses. The buyer's premium goes directly to the auction house and not to the seller.
Major auction houses have made this charge for some time, particularly in the fine arts sector, with premiums in the region of 10%-25%. In the real estate sector in many European countries, the premium, if charged at all, is much less (2%-2.5%). However, more recently, in the UK foreclosure properties have been offered without fee to the seller, but with a substantial buyer's premium of 10%.
The buyer's premium is considered to be either a necessary contribution to the costs of the administrative process or an unreasonable extra charge by the auction community. Auction houses may now market themselves as "not charging a premium" to gain favor with customers. Regardless, such premiums are now commonplace and continue to grow.
The amount of the buyer's premium will normally be stated in the auction house terms and conditions or, in the case of UK properties, it would be listed in the RICS (Royal Institute of Chartered Surveyors) Common Auction Conditions or in the special conditions for the lot.
In Europe, the buyer's premium will also be subject to VAT ( value added tax), while in the United States, some states require the premium to be included in the sales tax base.
Usage examples of "buyer's premium".
His London agent had bid it in at Sotheby's for twelve thousand pounds, over eighteen thousand dollars with the buyer's premium on the hammer price.