What are the implications of starting an auction business?

What are the implications of starting an auction business?


For an Auction house to have a credible reputation in South Africa it’s recommended that you join the South African Institute of Auctioneers (SAIA) which is a voluntary body that represents the industry in South Africa.

Advantages of joining SAIA

SAIA was established to provide a set of standards which members must adhere to in order to promote the ethical and professional practice of auctioneering as a profession. Members of the organisation vary from large corporates to smaller businesses.

No matter the size of the company, by becoming a member of SAIA, auctioneering houses show an honest commitment to providing a professional service to both sellers and buyers.

Legal requirements

Legal requirements differ depending on the type of Auction House that is being set-up.There are many different forms of auction houses including online auctioneers, such as eBay or Bid & Buy, to real estate, motor and general merchandise auction houses.

The regulations differ slightly. Members of SAIA contribute towards a Fidelity Fund that offers financial protection for the public who are involved in selling or buying movable goods at auctions. If your auction house deals with property auctions, the business is compelled to meet legal requirements by belonging to the Estate Agency Affairs Board. If you need for information from the Estate Agency Affairs Board go to the EAAB website.

Draw up terms and conditions

It is equally important to draw up a set of terms and conditions pertaining to the type of auction house you wish to set up. It is best to consult a professional attorney to draw up the contract so that your business is protected and that your customers understand what is expected of them, especially if the auction house is dealing with high priced items such as property, motor cars or antiques.

How does the Auction House make money?

Most auction houses will take 21% commission plus VAT from the seller on items that are valued under R5 000. On high priced items valued at over R5 000, the auction house will take 11% commission and VAT. Online auctioneers work in a different way. Agri Auctions is a South African online marketplace that matches buyers and sellers through their own trading platform. They charge a fee for successful transactions:

  • Livestock            = 3.5%
  • Property             = 7.5%
  • Movables            = 5 %
  • Commodities       = 2.5%
  • Fresh Produce     = 2.5%
  • Miscellaneous      = 5 %
  • Plus VAT


To run a successful auction house you must be able to verify and value items. A customer has to be given an estimation of the value of whatever it is they are trying to sell. If you do not have these skills, you have to employ someone does.

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