Auction Terms & Jargon: A simple list
There can be a steep learning curve if you're new to the auction buying process. Here is a list of several commonly used term. Please note that this list was adapted from the one found on the National Auctioneers Association.
A procedure that allows a bidder to participate in the bidding process without being physically present. Generally, a bidder submits an offer on an item prior to the auction. Absentee bids are usually handled under an established set of guidelines by the auctioneer or auction company. The particular rules and procedures of absentee bids are unique to each auction company.
A person (or entity) that is not present at the auction but submits, in advance, a written or oral bid that is the top price they will pay for a given asset.
An auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an “auction without reserve.”
A person who acts on behalf of another individual or entity.
The act or process of estimating value.
An auctioneer who is in training, operating under the supervision of a licensed or experienced auctioneer.
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, Where Is" and "In its Present Condition."
A method of selling property in a public forum through open and competitive bidding. Also known as “public auction” or “auction sale.”
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.
The method of marketing assets utilizing the auction method of sale.
The plan for pre-auction, auction-day and post-auction activities.
The price of a property obtained through the auction method of marketing.
The price that a particular property brings via competitive bidding at public auction.
Auction With Reserve
An auction in which the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time.
Auction Without Reserve
(See "Absolute Auction")
The person whom the seller engages to direct, conduct, or be responsible for a sale by auction. This person may or may not actually call or “cry” the auction.
An auctioneer hired by the principal auctioneer. Also known as a “Contract Auctioneer.”
A prospective buyer's indication or offer of a price they are willing to pay to purchase property at auction. Bids are usually in standardized increments established by the auctioneer.
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."
Individuals of a live auction team whose primary responsibility is to accurately interpret and effectively communicate buyer participation to their auctioneer. They should also be qualified to assist prospective bidders with the necessary information to make a better informed buying decision. Also known as “ringmen”, “bid spotters” or “groundsmen.”
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.
The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value. See “Collusion”.
The number issued to each person who registers at an auction.
The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at an auction. Also referred to as “bidder packet” or “due diligence packet.”
A method of sale whereby the successful high bidder wins the right to choose an asset or assets from a grouping of similar or like-kind assets. After the high bidder's selection, the asset is deleted from the group, and the second round of bidding commences, with the high bidder in round two choosing an asset, which is then deleted from the group and so on, until all assets are sold. Also known as “Buyer’s Choice.”
Bookkeeper or Clerk
The individual responsible for the accounting and paperwork at an auction sale.
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.
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.
A Latin term meaning "let the buyer beware." A legal maxim stating that the buyer takes the risk regarding quality or condition of the property purchased, unless protected by warranty.
An individual employed by the principal auctioneer or auction firm to record what is sold and to whom and for what price.
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.
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.
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. Also known as “Terms & Conditions”.
An agreement between two or more persons or entities which creates or modifies a legal relationship.
Sequence of key tasks to be done by auction contractor or other designated parties on specified dates, leading to desired goals.
The representation of opposing principals (buyers and seller) at the same time.
The process of gathering information about the condition and legal status of assets to be sold.
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.
Price established by the highest bidder and acknowledged by the auctioneer before dropping the hammer or gavel.
Intellectual Property (IP)
IP is a term referring to a number of distinct types of legal monopolies over creations of the mind, both artistic and commercial, and the corresponding fields of law. Under IP law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; words, phrases, symbols and designs.
The highest price that 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.
Properties owned by multiple sellers, offered through a common promotional campaign and auctioned in a single event.
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.
National Auto Auctioneers Association (NAAA)
Founded in 1948, the National Auto Auction Association represents more than 317 auto auction companies, both domestic and international, with more than 8.9 million units sold each year.
A charge paid by the owner of property offered at a reserve auction when the property does not sell.
An auction conducted on the premises of the property being sold.
The first bid offered by a bidder at an auction.
Specified date and time property is available for prospective buyer viewing and audits. Also known as “Open House” or “Inspection”.
The minimum price that a seller is willing to accept for a property to be sold at auction. Also known as “reserve price”.
The person designated by the auction company who is responsible for organizing the details of an auction. Also known as “project manager”.
A method of sale where by 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 marketplace.
Entity that has legal possession (ownership) of any interests, benefits or rights inherent to the real or personal property.
Public sale of property at auction by governmental authority due to nonpayment of property taxes.
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.
When two or more bidders bid exactly the same amount at the same time. This must be resolved by the auctioneer.
Failure to reach the reserve price or insufficient bidding.