Before attending an auction either online or in person, there a many terms that you will need to know! Not knowing these terms cause problems, especially when you intend on bidding. Here are the terms that you need to know for auctions!
Absentee Bid
A procedure which allows a bidder to participate in the bidding process without being physically present. Generally, a bidder submits an offer on a property or item prior to the auction. Absentee bids are usually handled under an established set of guidelines by the auctioneer or his representative. The particular rules and procedures of absentee bids are unique to each auction company.
Absentee Bidder
A person (or entity) who does not attend the sale but submits, in advance, a written or oral bid that is the top price he or she will pay for a given property.
Absolute Auction
An auction where the property is sold to the highest qualified bidder with no minimum bid or limiting conditions. The seller may not bid personally or through an agent. Also known as an auction without reserve.
Accounting of Sale
A report issued to the seller by the auctioneer detailing the financial aspects of the auction.
Advertising
Non-personal, paid communication such as newspaper, radio, direct mail and TV directed toward the general public or, in some cases, specific prospective client groups to provide information about the time, place, contents, and arrangements of an auction.
Agent
A person who acts for or in the place of another individual or entity by authority from them.
Agreement
An expression of mutual assent by two or more parties on a given proposition.
AMI Auctioneer
The act or process of estimating value.
Apprentice Auctioneer
An auctioneer who is in training, operating under the supervision of a licensed or experienced auctioneer.
Assisting Broker
Usually a local broker near the auction property. Contracted by auctioneer for assistance with due diligence, photography, showings, sign placement, etc.
“As Is, With All Faults”
Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as “As Is” and “In its Present Condition.”
Auction
A method of selling real estate in a public forum through open and competitive bidding. Also referred to as: public auction, auction sale or sale.
Auctioneer
A person whom the seller engages to direct, conduct or be responsible for a sale by auction.
Auction Block
The podium or raised platform where the auctioneer stands while conducting the auction. “Placing (an item) on the auction block” means to sell something at auction.
Auction Listing Agreement
A contract executed by the auctioneer and the seller which authorizes the auctioneer to conduct the auction and sets out the terms of the agreement and the rights and responsibilities of each party.
Auction Marketer
An individual who contracts with sellers for the auction method of marketing property. In the case of real property, he or she may not actually conduct the sale but is directly responsible for all aspects of marketing the property.
Auction Marketing
The method of marketing real property utilizing the auction method of sale.
Auction Marketing Institute, Inc.
(AMI) Founded in 1976, this international association awards the professional designations CAI and AARE to properly qualified auctioneers through education, experience, and adherence to a strict code of ethics and standards of practice. Formerly known as the Certified Auctioneers Education Institute, Inc.
Auction Plan
The itinerary for pre-auction, auction day and post auction activities, set by auctioneer and seller.
Auction Price
The price of a property obtained through the auction method of marketing.
Auction Subject to Confirmation
See Reserve Auction.
Auction Value
The price which a particular property brings in open competitive bidding at public auction.
Auction With Reserve
An auction in which the seller or his agent reserves the right to establish a minimum bid, to accept or reject any and all bids and to withdraw the property at any time prior to the completion of the sale by the auctioneer.
Auction Without Reserve
See Absolute Auction.
Auctioneer Subcontractor
An auctioneer hired by the principal auctioneer.
Back-Up Bidder
Any bidder except the highest bidder. Many sellers reserve the right to sell to the Back Up Bidder if the high bidder defaults.
Ballroom Auction
An auction of one or more properties conducted in a meeting room facility.
Bank Letter of Credit
A letter from a bank certifying that a named person is worthy of a given level of credit. Often requested from prospective bidders or buyers who are not paying with currency at auctions.
Bid
A prospective buyer’s indication or offer of a price he or she will pay to purchase property at auction. Bids are usually in standardized increments established by the auctioneer.
Bid Acknowledgment
A form executed by the high bidder confirming and acknowledging the bidder’s identity, the bid price and the description of the property. Also known as Memorandum.
Bid Assistants
Individuals who are positioned throughout the attendees at the auction to assist the auctioneer, spot bidders and assist prospective bidders with information to help them in their buying decision. Also known as ringmen, bid consultants, bid spotters, or groundsmen.
Bid Caller
The person who actually “calls,” “cries” or “auctions” the property at an auction, recognizing bidders and acknowledging the highest bidder. Commonly known as the auctioneer.
Bid History
A historical list of all the bids made on a particular auction during or after the auction.
Bid Increments
Minimum acceptable bid advance. Announced prior to the opening of the bidding by the auctioneer.
Bid Package
The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at an auction. Sometimes called a property information package (PIP), bidder packet or due diligence package.
Bid Rigging
The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value.
Bidder Number
The number issued to each person who registers at an auction.
Bidder’s Choice
A method of sale whereby the successful high bidder wins the right to choose a property or properties from a grouping of similar or like-kind properties. After the high bidder’s selection, the property is deleted from the group, and the second round of bidding commences, with the high bidder in round two choosing a property, which is then deleted from the group and so on, until all properties are sold.
Bidding
To make an offer on an item that is up for public auction.
Bookkeeper or Clerk
The person who is responsible for the accounting and paperwork at an auction sale.
Broker Participation
An arrangement for third-party brokers to register potential bidders for properties being sold at auction for a commission paid by the owner of the property or the auction firm. Also known as Broker Commission.
Buyer’s Broker
A real estate broker who represents the buyer and, as the agent of the buyer, is normally paid for his/her services by the buyer.
Buyer’s Premium
An advertised percentage of the high bid or flat fee added to the high bid to determine the total contract price to be paid by the buyer.
Carrying Costs
The costs involved in holding a property which is intended to produce income (either by sale or rent) but has not yet done so, i.e., insurance, taxes, maintenance, management.
Catalog or Brochure
A publication advertising and describing the property(ies) available for sale at public auction, often including photographs, property descriptions, and the terms and conditions of the sale.
Clerk
The person employed by the principal auctioneer or auction firm to record what is sold and to whom and for what price.
Client
The party for whom the auctioneer sells property; it is often synonymous with “seller.”
Collusion
The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value, or when the auctioneer accepts a fictitious bid on behalf of the seller so as to manipulate or inflate the price of the property.
Commission
The fee charged to the seller by the auctioneer for providing services, usually a percentage of the gross selling price of the property established by contract (the listing agreement) prior to the auction.
Completion of Sale
A sale by auctioneer is complete when the auctioneer so announces by the fall of the hammer or in some other customary manner.
Conditions of Sale
The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer’s premiums, possession, reserves and any other limiting factors of an auction. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.
Contact Information
The user information, including name, address, email, and phone number, provided when registering at an online auction site. All online auction sites require registered users to submit valid contact information.
Contract
An agreement between two or more persons or entities which creates or modifies a legal relationship.
Cooperating Broker
A real estate broker who registers a prospective buyer with the auction company, in accordance with the terms and conditions for that auction. The broker is paid a commission only if his prospect is the high bidder and successfully closes on the property. Also known as a participating broker.
Customer
A party who attends the auction for the purpose of buying the property offered for sale.
Dual Agency
The representation of opposing principals (buyers and seller) at the same time.
Due Diligence
The process of gathering information about the condition and legal status of assets to be sold.
Escrow
Money held in trust by a third party until the seller makes delivery on merchandise to the buyer.
Estate Auction
The sale of property left by a person at his or her death. An estate auction can involve the sale of personal and/or real property.
Exclusive Right to Sell
An auction agreement between the owner of a property and an auctioneer giving the auctioneer the exclusive right to sell the property and receive the agreed-upon commission when the property is sold, regardless of who is responsible for producing the buyer.
Hammer Price
Price established by the last bidder and acknowledged by the auctioneer before dropping the hammer or gavel.
Junior Lien
All liens recorded after the mortgage or lien being foreclosed.
Listing Agreement
See Auction Listing Agreement.
Listing Broker
A real estate broker who has a listing on a property and cooperates with the auction company by allowing the auction agreement to supersede his/her listing agreement.
Lot
A single auction that is in progress.
Market Value
The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.
Minimum Bid
The lowest acceptable price at which the seller agrees to complete the sale.
Minimum Bid Auction
An auction in which the auctioneer will accept bids at or above a disclosed price. The minimum price is always stated in the brochure and advertisements and is announced at the auctions.
Minimum Opening Bid
The lowest acceptable amount at which the bidding must commence.
Mortgagee
A bank or any other financial institution acting as foreclosing party.
Mortgagor
A borrower of money using property as collateral.
Multi-Property Auction
A group of properties offered through a common promotional campaign. The properties to be auctioned may be owned by one seller or multiple sellers.
Multi-Seller Auction
Properties owned by many sellers, offered through a common promotional campaign are auctioned in a single event.
Municipal Lien Certificate
Document containing information regarding real estate taxes, tax title, water bills, sewer bills and betterments in arrears.
National Auctioneers Association
(NAA) An association of individual auctioneers united to promote the mutual interests of its members; formulate and maintain ethical standards for the auction profession; promote the enactment of just and reasonable laws, ordinances and regulations affecting auction selling; make the public more aware of the advantages of auction selling; and generally improve the business conditions affecting the auction profession.
No-Sale Fee
A charge paid by the owner of the property offered at a reserve auction when the property does not sell.
Opening Bid
The first bid offered by a bidder at an auction.
On-site Auction
An auction conducted on the premises of the property being sold.
Outbid
To submit a bid that is higher than another buyer’s bid.
Participating Broker
See Cooperating Broker.
Private Auction
An auction in which the identities of the bidders are anonymous.
Property Information Package (PIP)
The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at or prior to an auction. Sometimes called a bid package, bidder packet or due diligence package.
Proxy Bidding
To submit a confidential maximum bid to an online auction service’s automated bidding system. The system’s electronic “proxy” will automatically increase the buyer’s bid to maintain the high bid. The proxy bidding system will stop when it has won the auction or reached the maximum bid.
Preview
Specified date and time the property is available for prospective buyer viewing and audits. Also known as Open House or Inspection.
Referring Broker
A real estate broker who does not have a listing on a property, but refers the auction company to a potential seller for an auction. Usually earns a flat fee commission for referring product to an auction company.
Registered User
A person who has registered as a member of an online auction service. All online auction services require registration prior to participation in an auction.
Regroup
A process used in real estate auctions where a bidder has the opportunity to combine several parcels of land previously selected by other bidders, thereby creating one larger parcel out of several smaller parcels. This process is often used in conjunction with bidder’s choice.
Related Party
Any member of an auctioneer’s immediate family, the auctioneer’s firm or any member thereof or any entity in which the auctioneer or one of the above owns a controlling interest.
Reserve Price
The minimum amount that a seller is willing to accept for a property to be sold at auction.
Reserve Auction
An auction in which the seller reserves the right to establish a disclosed or undisclosed reserve price, to accept or decline any and all bids or to withdraw the property at any time prior to the announcement of the completion of the sale by the auctioneer. See also Auction With Reserve.
Sale Manager
The person designated by the auction company who is responsible for organizing the details of an auction. Also known as project manager.
Sealed Bid
A method of sale utilized where confidential bids are submitted to be opened at a predetermined place and time. Not a true auction in that it does not allow for reaction from the competitive market place.
Sealed Bid/Outcry Auction
A combination of sealed bid and outcry auction where the best of the sealed bidders are invited to compete in an outcry auction, allowing a final opportunity to win the property. Preferable to a Sealed Bid Sale. Protects Seller and Bidders.
Seller
Entity that has legal possession, (ownership) of any interests, benefits or rights inherent to the real or personal property.
Senior Liens
All liens recorded prior to the mortgage or lien being foreclosed as well as certain government liens such as municipal taxes and the IRS 120 day right of redemption. Senior liens become the responsibility of the high bidder/ purchaser.
Sniping
Bidding in the closing minutes or seconds of an auction to outbid other buyers.
Starting Price
The mandatory starting bid for a given auction, set by the seller at the time of listing.
Subject to Confirmation
The property is offered to the public at auction, the highest possible bid is presented to the seller, & they can say yes or no to that offer. Nearly all properties do sell.
Tax Sale
Public sale of property at auction by governmental authority, due to nonpayment of property taxes.
Terms of Service
A legally binding agreement that outlines an auction site’s operations and policies. All registered users must agree to a site’s terms before using the service.
Terms and Conditions
The printed rules of the auction and certain aspects of the Purchase & Sale Agreement that are read and/or distributed to potential bidders prior to an auction sale. Also known as Terms or Terms of Sale.
Tie Bids
When two or more bidders bid exactly the same amount at the same time and must be resolved by the auctioneer.
Trustee’s Sale
A sale at auction by a trustee.
Upset Price
The bid amount that exceeds a seller’s reserve price. See Reserve Price.
User Information
Personal data provided by a user when registering for an online auction site, including name, address, email, and phone number.
