Auction Glossary

A

Absentee Bid - 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 absenteebids are unique to each auction company.

Absentee Bidder - 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.

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."

Accredited Auctioneer Real Estate (AARE) - The professional designation awarded by the NAA Education 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. In order to be designated with the AARE, auctioneer-scholars are required to complete 42 classroom hours, a detailed written auction summary report, proof of at least 10 real estate auctions, and 24 hours ofcontinuing education every three years.

Agent - A person who acts on behalf of another individual or entity. 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."

As Is- Where Is -This refers to 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 known as "public auction" or "auction 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 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")

B

Ballroom Auction - An auction of one or more properties conducted in a meeting room facility.

Bid - 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.

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 Rigging - The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value. See "Collusion".

Bidder Information 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. Also referred to as "bidder packet", "property information package", or "due diligence packet."

Bidder Number - The number issued to each person who registers at an auction.

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.

C

Caravan Auctions - A series of on-site auctions advertised through a common promotional campaign.

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 Institute (CAI) - The professional designation awarded to practicing auctioneers who meet the experiential, educational and ethical standards set by the NAA Education Institute. In order to be granted the CAI designation, auctioneer scholars must have been practicing full-time auctioneers for at least two year (prior to attending the institute), attend all three years of CAI with more than 120 classroom hours, complete all special projects and complete 24 hours of continuing education every three years.

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.

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".

D

Due Diligence - The process of gathering information about the condition and legal status of assets to be sold.

E

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.

F

G

H

Hammer Price - Price established by the highest bidder and acknowledged by the auctioneer before dropping the hammer or gavel.

I

L

M

Market Value - 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.

Memorandum - Also referred to as a "Bidder Acknowledgment," or "Broker Acknowledgment," the memorandum is signed by those parties either on the auction floor or site in field,  or in the contract room.

N

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.

O

On-Site Auction - An auction conducted on the premises of the property being sold.

Opening Bid - The first bid offered by a bidder at an auction.

Other Real Estate Owned (OREO) - Real property owned by a banking institution that is not directly related to its business. In balance sheet terms, OREO assets are considered non-earning assets for purposes of regulatory accounting. OREO is most frequently a result of foreclosure on real property as a result of default by the borrower who used the property as collateral for the loan. Most items in this category are available for sale.

P

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".

Property Information 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. Also referred to as "bidder packet", "property information package", or "due diligence packet.

R

Real Estate (RE) - Real estate, also known as real property, is a legal term that encompasses land along with improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location -- immovable.

Real Estate Owned (REO) - REO is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction. A bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the bank will legally repossess the property. As soon as the bank repossesses the property, it is listed on their books as REO and is categorized as an asset (non-performing).

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.

Reserve - The minimum price that a seller is willing to accept for a property to be sold at auction. Also known as "reserve price".

S

Sealed Bid - A method of sale where by confidential bids are submitted to be opened at a pre-determined place and time. Not a true auction in that it does not allow for reaction from the competitive marketplace.

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

T

Tax Sale - 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.

Tie Bids - When two or more bidders bid exactly the same amount at the same time. This must be resolved by the auctioneer.

U

Uniform Commerical Code (UCC) - The UCC, first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all U.S. states.

W

Withdrawal - Failure to reach the reserve price or insufficient bidding.