AUCTION
GLOSSARY
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.
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AARE
(Accredited Auctioneer, Real Estate) |
The professional
designation awarded by the Auction Marketing Institute, Inc.
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.
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| 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.
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| 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.
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| 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
real estate 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.
"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. |
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 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.
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| 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.
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| 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.
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| 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.
|
| Certified Auctioneers
Education Institute, Inc. |
Now known as the
Auction Marketing Institute, Inc. See Auction Marketing Institute,
Inc.
|
| Clerk |
The person employed
by the principal auctioneer or auction firm to record what is
sold and to whom and for what price.
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| 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.
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| 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.
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| Contract |
An agreement between
two or more persons or entities which creates or modifies a
legal relationship.
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| 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.
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| Dual Agency |
The representation
of opposing principals (buyers and seller) at the same time.
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| Due Diligence |
The process of gathering
information about the condition and legal status of assets to
be sold.
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| 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.
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| Groundsman |
See Bid Assistants.
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| Hammer Price |
Price established
by the last bidder and acknowledged by the auctioneer before
dropping the hammer or gavel.
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| 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.
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| 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.
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| 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.
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| 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.
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| Minimum Opening
Bid |
The lowest acceptable
amount at which the bidding must commence.
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| 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.
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| Multi-Seller Auction |
Properties owned
by many sellers, offered through a common promotional campaign
are auctioned in a single event.
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| 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.
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| National Real Estate
Auction Committee |
A national committee
developed by the National Association of REALTORŪs 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.
The Committee was sunset in November, 1999. All auction activities
hosted by NAR now fall under the purview of the Auction Forum.
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| No-Sale Fee |
A charge paid by
the owner of property offered at a reserve auction when the
property does not sell.
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| Opening Bid |
The first bid offered
by a bidder at an auction.
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| On-site Auction
|
An auction conducted
on the premises of the property being sold.
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| 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.
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| 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.
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| 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.
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| 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.
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| Sale Manager |
The person designated
by the auction company who is responsible for organizing the
details of an auction. Also known as project manager.
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| 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.
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| Seller |
Entity that has
legal possession, (ownership) of any interests, benefits or
rights inherent to the real or personal property.
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| Subject to Confirmation |
See Reserve Auction.
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| Tax Sale |
Public sale of property
at auction by governmental authority, due to nonpayment of property
taxes.
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| 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.
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| Trustee's Sale |
A sale at auction
by a trustee.
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| Upset Price |
Commonly known as
the reserve price.
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Withdrawal
|
Failure to reach
the reserve price or insufficient bidding.
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