The following is a glossary of real estate auction terms developed
by the National Association of Realtors – Real Estate Auction
Committee, the National Auctioneers Association and the Auction
Marketing Institute. While it is a real estate glossary, most of
the terms apply to all types of auctions.
AARE (Accredited
Auctioneer,
Real Estate) |
The professional designation awarded by the Auction Marketing
Institute. to qualified real estate auctioneers who meet the
educational and experiential requirements of the Institute
and who adhere to a strict code of ethics and standards of
practice. |
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 an 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 limiting conditions or amount. 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. |
Agent |
A person who acts for or in the place of another individual
or entity by authority from them. |
Appraisal |
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. |
"As Is” |
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.” |
Auction |
A method of selling property in a public forum through open
and competitive bidding. Also referred to as: public auction,
auction sale or sale. |
Auction Block |
The podium or raised platform where the auctioneer stands
while conducting the auction. |
Auction Listing |
"Placing (an item) on the auction block" means
to sell something at auction. |
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. |
|
Founded in 1976, this international association awards the
professional designations CAI, GPPA 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 plan for pre-auction, auction day and post auction activities. |
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 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. |
| Auctioneer
|
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. |
Auctioneer
Subcontractor
|
An
auctioneer hired by the principal auctioneer. |
| 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 identify, 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
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
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 bidder packet or due diligence package. |
| 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. |
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. |
| 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. |
| CAI
|
Certified
Auctioneers Institute. The professional designation awarded to practicing
auctioneers who meet the experiential, educational and ethical standards
set by the Auction Marketing Institute, Inc. |
Caravan
Auctions
|
A
series of on site auctions advertised through a common promotional
campaign. |
Carrying
Charges
|
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. |
| Caveat
Emptor |
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. |
| Clerk
|
The
person employed by the principal auctioneer or auction firm to record
what is sold and to whom and for what price. |
| 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. |
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. |
| 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. |
| Critical
Path |
Sequence
of key tasks to be done by auction contractor or other designated
parties on specified dates, leading to desired goals. |
| 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. |
| Estate
Sale |
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. |
| Graduate,
Personal Property Appraiser (GPPA) |
The
professional designation awarded by the Auction
Marketing Institute to qualified property appraisers who meet
the educational and experiential requirements of the Institute and
who adhere to a strict code of ethics and standards of practice.
|
Groundsman
|
See
Bid Assistants. |
Hammer
Price
|
Price
established by the last bidder and acknowledged by the auctioneer
before dropping the hammer or gavel. |
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. |
| 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. |
| Memorandum
|
Sometimes
also referred to as a "Bidder Acknowledgment," or "Broker
Acknowledgment," the memorandum is signed by those parties either
on the auction floor or in the contract room. |
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. |
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. |
National
Auctioneers
Association
|
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
Real Estate
Auction Committee
|
A
national committee developed by the NATIONAL ASSOCIATION OF REALTORS
in April, 1990 to provide education to members concerning real estate
auctions, identify issues and monitor, review and analyze trends affecting
the real estate auction industry. It also is charged with formulating
policies for consideration by other policy-making NAR Committees,
its Executive Committee and Board of Directors. |
| No-Sale
Fee |
A
charge paid by the owner of 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. |
Participating
Broker
|
See
Cooperating Broker. |
Preview
|
Specified
date and time 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. |
| 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. |
| Reserve
|
The
minimum price that a seller is willing to accept for a property to
be sold at auction. Also known as the reserve price. |
Reserve
Auction
|
An
auction in which the seller reserves the right to establish a 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. |
| Seller
|
Entity
that has legal possession, (ownership) of any interests, benefits
or rights inherent to the real or personal property. |
Subject
to
Confirmation
|
See
Reserve Auction. |
| Tax
Sale |
Public
sale of property at auction by governmental authority, due to nonpayment
of property taxes. |
| Terms
|
The
period of time that an agreement is in effect. |
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. |
| 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 |
Commonly
known as the reserve price. |
| Withdrawal
|
Failure
to reach the reserve price or insufficient bidding. |
