Many states require auctioneers to have an auctioneer bond to become a licensed auctioneer. The state government requires this kind of bond before you can host an auction and sell goods. If any auctioneer misconduct financially harms individuals, they can file a claim against the bond. If the claim is found to be valid, the auctioneer’s surety will compensate the person, and the auctioneer will need to pay the surety company back any additional charges.
Some examples where an auctioneer can break their moral obligations include:
The price of an auctioneer bond starts at $100 a year and is a fixed percentage of the bond amount. Typically, the premium rate is between 1-5% of the bond amount. However, it is important to remember that there are a few factors that determine the exact cost of your bond, such as your current state’s regulations and personal financial background.
Having a strong financial background, specifically credit score, will help you have lower bond costs. Applicants with higher credit scores and a strong track record will likely have lower bond rates than an applicant with lower credit scores and a weak track record. For instance, for a $10,000 Auctioneer Bond, having a credit score of 625+ will get you to only pay $100 a year, compared to paying $500 for a credit score of 500-574.
Also, it is important to understand what your state requires the bond amount to be as each state differs in pricing.
Auctioneers are individuals who manage a public sale, known as an auction, where people can bid on certain items that they want. State definitions vary on who is really considered an “auctioneer”, but typically, it is anyone who sells property to bidders during an auction.
There can be general exceptions to who is actually an auctioneer. Some instances where you necessarily do not require this bond include: non-profit organizations, individuals selling their own property, administrators of an estate, etc. It's a good idea to talk with your surety company before getting one. Our team offers quick services to meet your needs to help you obtain an auctioneer bond fast!
Usually, licensed auctioneers would need this bond. Having this bond helps you make sure that you are morally abiding by the state rules when hosting an auction. Currently, 23 states require this bond in order for you to become licensed as an auctioneer, including California, New York, and Nevada. However, the other 27 states, such as Alaska, Florida, Hawaii, etc. do not necessarily need you to have this bond. Ensure that the bond company you choose can provide bonds in your state that meet the official state requirements.
An auctioneer bond is a three-way party between the auctioneer, the auctioneer’s surety, and the specific state that requires this bond. If an auctioneer is unethically conducting an auction, the consumer can file a claim against their bond. The auctioneer’s surety will need to figure out if the claim is valid. If it is, the surety will pay out the claim charges to the consumer rather than the auctioneer themselves. The auctioneer will eventually need to reimburse the surety for all the valid claims and the costs of handling those claims. Overall, this bond helps auctioneers not take advantage over the buyers when handling auctions.
For example, let’s say that an auctioneer has decided to sell a fake valuable during an auction, and the buyer discovered that after bidding for it. The buyer has the option to file a claim against the auctioneer’s bond for their misconduct. Once the claim gets filed, the auctioneer’s surety company will review their submission and decide if it is legitimate. If it is valid, the surety will pay back the buyer the amount according to the bond.
To purchase an auctioneer bond, you have the option of enrolling with a surety broker. If you go with an online broker, which is usually the easiest option, you will fill out an online application that will ask you for your personal information, such as financial background and credit history. Once the application is finished, the surety agency will send it to the company that issues the bond. This type of firm is known as a carrier.
The carrier then goes through an evaluation process known as underwriting where they determine if your auctioneer bond is eligible or not. They may ask for more documents to be filled if needed.
Within a few days, the insurance agency will contact you to pay for the auctioneer bond. Once payment is complete, you will receive the bond digitally through email.
If an auctioneer shows unprofessional behavior when hosting an auction, the buyer affected by their malpractice can file a claim against the auctioneer's bond. What happens is that the surety company will begin checking to see if the request is legitimate, and if it is, they'll start looking into it. The surety company will deny the claim if it's not a real problem.
If the request is valid, the surety company will step in and compensate the buyer for any losses they have faced. This means that the buyer will eventually receive their payment.
The surety company will eventually need to collect money from the auctioneer to pay off the charges of the claim.