Auction Fees
Synonyms: Auction Costs، Auction Commission، Sa'y (Saudi brokerage fee)، Buyer Fees
Last updated: 2026-09-25
Short Definition
Auction fees are the amounts borne by the buyer or seller on top of, or out of, the award price to complete an auction sale; in Saudi Arabia they mainly comprise the brokerage commission (sa'y), VAT on it and the Real Estate Transaction Tax, as set in each auction's terms.
Overview
Legal Basis
Article 14 of the Real Estate Brokerage Law, issued by Royal Decree No. (M/130) dated 30/11/1443H, sets brokerage commission at 2.5% of the deal value for sales unless the parties to the brokerage contract agree otherwise in writing, payable by the party that contracted the broker. Brokerage services are subject to 15% VAT, and real estate disposals are subject to the 5% Real Estate Transaction Tax under its law issued by Royal Decree No. (M/84) dated 19/3/1446H. Article 8 of the Organization of the Support and Liquidation Center (Council of Ministers Resolution No. 415 dated 19/7/1440H) lists among the center's resources a share of up to 5% of the total proceeds of liquidations or sales referred by judicial and government bodies, inclusive of all fees. Article 50(3) of the Execution Law makes a defaulting buyer liable for the costs of the new auction.
Practical Example
A plot in Riyadh is awarded at SAR 1,600,000, and the terms place commission and taxes on the buyer. The buyer's calculation: 2.5% commission = SAR 40,000; 15% VAT on the commission = SAR 6,000; 5% Real Estate Transaction Tax = SAR 80,000. The total is SAR 126,000, bringing the overall cost to SAR 1,726,000 (7.875% above the award price). Had the plot been an asset referred by a court to Infath, the center's share (capped at 5% of the proceeds) would have been deducted from the price before distribution to creditors, not paid by the buyer.
Common Mistakes
- ✗Setting a bidding ceiling on the award price alone — costs can add around 8% when the buyer bears commission and taxes.
- ✗Assuming the commission rate is fixed across all auctions — the law makes 2.5% a default that can be varied in writing, and terms differ between auctions.
- ✗Overlooking whether the commission rate includes VAT or VAT is added — this is settled in the auction terms.
- ✗Confusing Infath's share of the proceeds with fees paid by the buyer — the center's share is deducted from the sale proceeds.
- ✗Ignoring the re-auction costs borne by a buyer who defaults on payment.
International Differences
Auction fee structures vary worldwide. In the UK and US, auction houses often charge a «buyer's premium» as a percentage of the hammer price plus administration fees, with separate property transfer taxes. In Turkey, buyers at enforcement auctions bear registration fees and VAT where applicable. In the UAE, land department fees and the auction company's fees are added. The Saudi model is distinctive in having a statutory default commission rate (2.5%) and in subjecting property sales to a separate transaction tax (5%) instead of VAT.
