Revenue Recognition (Agency Revenues)  Through its Agency segment, Sotheby s accepts property on consignment, stimulates buyer interest through professional marketing techniques, and matches sellers (also known as consignors) to buyers through the auction or private sale process. Prior to offering a work of art for sale, Sotheby s specialists perform significant due diligence activities to authenticate and determine the ownership history of the property being sold. The revenue recognition policy for each of the principal components of Agency Revenues is described below. (1) Auction Commission Revenues  In its role as auctioneer, Sotheby s accepts property on consignment and matches sellers to buyers through the auction process. Following the auction, Sotheby s invoices the buyer for the purchase price of the property (including the commission owed by the buyer), collects payment from the buyer, and remits to the consignor the net sale proceeds after deducting its commissions, expenses and applicable taxes and royalties. Sotheby s auction commissions include those paid by the buyer ( buyer s premium ) and those paid by the seller ( seller s commission ) (collectively,  auction commission revenue ), both of which are calculated as a percentage of the hammer price of the property sold at auction. On the fall of the auctioneer s hammer, the highest bidder becomes legally obligated to pay the full purchase price, which includes the hammer price of the property purchased plus the buyer s premium, and the seller is legally obligated to relinquish the property in exchange for the hammer price less any seller s commissions. Auction commission revenue is recognized on the date of the auction sale upon the fall of the auctioneer s hammer, which is the point in time when Sotheby s has substantially accomplished what it must do to be entitled to the benefits represented by the auction commission revenue. Subsequent to the date of the auction sale, Sotheby s remaining obligations for its auction services relate only to the col