Auction Glossary

Real Estate Auction Terminology

Absentee Bid

A bid the is cast by a potential buyer who cannot attend the auction event. There is usually a pre determined maximum bid about. A member of the auction staff or in some cases the auctioneer bids on behalf of the absentee bidder until the max bid is reached or there is a sale of the property.

Absentee Bidder

A person who cannot attend the auction allows the auction company to bid on their behalf.

Absolute Auction

An auction that has no reserve or confirmation. The property will sell “absolutely” regardless of the price brought forth from the auction.

Agency

When selling real estate the term “agency” is used in real estate to help describe the legal relationship between the seller and broker (auctioneer) or the buyer and broker. An auctioneer usually fork as a “single agent” for the seller (See Single Agent)

“As Is – Where Is“

Selling the property in it’s current condition without contingencies for repair or curing any defects. It is the buyer’s responsibility to inspect the property prior to the auction and bid based on the findings of the infection.

Auction

A method marketing and selling property by way of competitive bidding. It should be noted that real estate auctions drive the sales price upwards while traditional real estate negotiations often negotiate downward.

Auction Price

The price where the bidding stops at auction and a winner declared. The auction price is the gross price before buyer’s premium and other fees are added to determine sale price. Also called “Hammer Price” (See “Buyer’s Premium”)

Auctioneer

A person who directs the sale of property through a process of open, competitive bidding.

Bid

An affirmation by a prospective buyer that they will agree to pay a specific price for the auction property. A bid is a contract. The bid is cancelled when another buyer agrees to pay more. This process of competitive price increases continues until there is one person who agrees on a pice that no-one else will better.

Bid Assistants

Also know as “ringmen”. Bid assistants are generally employees of the auction company that watch and monitor the live bidders to help the auctioneer recognize bids that might be missed in a large crowd. In a real estate auctions, the bid assistants are licensed real estate agents in most states and carry information about the property to assist bidders in making the decision to buy.

Bid Caller

A bid caller is essentially an auctioneer, although all auctioneers are not bid callers. A bid caller either “chants” or calls out the basking bid audibly to evoke a response and bid from prospective buyers during an auction. An auctioneer may conduct an auction, for instance an “online only” auction and never utter a word thus not acting as a “bid caller”.

Bid Rigging

When two or more bidders conspire not to bid against one another to increase the price. They plan to share in the property or allow each other to win separate properties at a lower price by agreed non-competition. Bid rigging is a felony in the United States. Auctioneers often use video cameras to catch and prosecute suspected bid rigging.

Bidder’s Choice

Bidders choice or “high bidders choice” is a when a group of properties is presented to the bidders. They bid to have first choice of buying one or more properties in the group for their bid price. After the high bider chooses the properties he wants to buy at his winning bid price they are removed from the group. Bidding is reopened on the remaining properties in t he group. and the high bidder of that round chooses. This is reported until all of the properties are sold. Also called “choice out”.

Broker Participation

This is a mechanism where licensed real estate agents and brokers can bring buyers represent buyers at the auction and earn a commission.

Buyer’s Premium

An advertised percentage of the high bid or flat fee that is added to the high bid. In a real estate auctiion, he buyers premium is added to the high bid to arrive at the contract price. The buyer’s premium is how the auction company and auctioneers get paid.

Carrying Costs

The costs involved in holding a property over time. Costs include, mortgage payments, taxes, insurance, taxes, maintenance and similar recurring costs. More about carrying costs

Caveat Emptor

In Latin caveat emptor means “let the buyer beware.” It means that the buyer takes responsibility for the condition of the property purchased. (See “as is, where is”)

Clerk

Employee of the auction company that records the buyers and the price sold for an auction.

Collusion

See “Bid Rigging”

Commission

The fee charged to the seller by the auctioneer, usually a percentage of the sale price of the property. The commission paid by the seller and the buyer’s premium is paid by the buyer (see buyer’s premium)

Conditions of Sale

The legal terms that state the terms of the sale. The conditions and terms are usually published prior to the sale android aloud by the auctioneer in a live sale. The conditions might include; payment method, amount of buyer’s premium, stated reserves and closing information.
Contract

Contract

A written or verbal agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.
Cooperating Broker

A licensed broker or agent who brings or represents a buyer. Cooperating brokers can earn a commission if their buyer is the successful bidder. See “broker participation”)

Dual Agency

The representation or the ability to represent both buyers and sellers in a real estate sale. As a general rule, auctioneers and auction companies are “single agents” representing the seller. Traditional real estate agents are generally “transaction brokers” and can represent buyers and sellers.

Due Diligence

The process of researching a property being sold at auction. The auction company will usually provide a due diligence package with information about the property. Buyers are encouraged to do their own due diligence (see “caveat emptor”).

Due Diligence Package

This is the information gathered by the auction company about a subject property that buyers have access to prior to the sale, The package may include, maps, tax information, public records, surveys or any other documents pertaining to the subject property.

Estate Sale

The sale of property left by an individual upon their death. An estate auction can involve the sale of personal and/or real property.

Hammer Price

The winning high bid. Price established by the last bidder and acknowledged by the auctioneer before dropping the hammer or gavel and announcing “sold. This is the price before taxes and buyer’s premium are added to determine the contract price.

Increments

The succession of price increases that the auctioneer sets for the bidders.

Listing Agreement

A contract that grants the auction company exclusive right of sale of the subject property for a determined amount of time for a specific compensation. 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 take precedence over his/her listing agreement. The seller will enter into a listing agreement with the auction company and the broker will be named as a cooperating broker.

Market Value

The highest price that a property will bring in a competitive and open market at a specific time.

Minimum Bid

A stated or publishes price that will be the lowest bid taken start the competitive bidding process.

Multi-Par Auction

A group of properties that will be offered in multiple combinations to achieve the highest value for the seller. Similar to “bidders choice” but the properties can be offered in multiple combinations or groups.

No-Sale Fee

A charge paid by the seller of a property 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 that a subject property is open for prospective bidders to tour and inspect.

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.

Sealed Bid

A method of sale where confidential bids are submitted, usually sealed in envelopes to be opened at a predetermined place and time. Buyers are cautioned to bid their highest and best price to be successful.

Seller

Person or entity that has legal possession, (ownership) of any interests, benefits or rights inherent to the real or personal property.

Seller’s Confirmation

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.

Shill Bidding

An illegal practice where an associate of the seller or auction company bids on an item with the intent to artificially increase its price.

Stalking Horse

A stalking-horse bid is an initial bid on a property or assets in a bankruptcy case from an interested buyer chosen by the court or trustee.

Subject to Confirmation

(See “Seller’s Confirmation.” )

Terms and Conditions

The published rules of the auction that are published or read to potential bidders prior to an auction.