Glossary of Auction Terms

The following is a real estate terms dictionary and glossary 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.  We hope you find it useful!

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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 a property or item prior to the auction. Absentee bids are usually handled under an established set of guidelines by the auctioneer or the auctioneer’s 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 minimum bid or limiting conditions. 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.

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.

AMI Auctioneer An auctioneer who has earned the CAI designation, AARE designation, GPPA designation or has been admitted as a candidate for the CAI designation.

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.

Assisting Broker Usually a local broker near the auction property. Contracted by auctioneer for assistance with due diligence, photography, showings, sign placement, etc.

“As Is, with All Faults” 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.

Auctioneer A person whom the seller engages to direct, conduct or be responsible for a sale by 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 Marketing The method of marketing real property utilizing the auction method of sale.

AMI(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 the seller’s agents reserves the right to establish a minimum bid, to accept or reject any and all bids and to withdraw the property at any time prior to the completion of the sale by the auctioneer.

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. If the auctioneer does call the property at an auction, this individual is commonly referred to as the bid caller.

Auctioneer Subcontractor An auctioneer hired by the principal auctioneer.

Back Up Bidder Any bidder except the highest bidder. Many sellers reserve the right to sell the Back UP Bidder if the high bidder defaults.

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 identity, the bid price and the description of the property. Also known as Memorandum.

Bid Assistants Individuals who are positioned throughout the crowd of 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.

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.

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

Bidding To make an offer on an item that is up for public auction.

Bid Increments Minimum acceptable bid advance. Announced prior to the opening of the bidding by the auctioneer.

Bid 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 property information packet or due diligence package.

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

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 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 properties 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.

Client The party for whom the auctioneer sells property. It is often synonymous with “seller”.

Collusion The unlawful practice whereby two or more people agree 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.

Completion of Sale The legal terms that govern the conduct of an auction, including acceptable method 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.

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.

Contact Information The user information, including name, address, e-mail and phone number, provided when registering at an online auction site. All online auction sites require registered users to submit valid contact information.

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, accordance with the terms and conditions for that auction. The broker is paid a commission only if the broker’s 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.

Escrow Money Held in trust by a third party until the seller makes delivery on merchandise to the buyer.

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.

Featured Auctions An online auction site’s most prominent auctions of the day. Generally, a single auction will not earn this distinction unless the seller has a positive feedback rating.

Final Value Fee A fee paid by the seller to an auctioneer at the completion of an auction, calculated as a percentage of the final sale price. See Buyer’s Premium.

Groundman See Bid Assistants.

Hammer Price Price established by the last bidder and acknowledged by the auctioneer before dropping the hammer or gavel or otherwise ending the auction of that property.

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.

Lot A single auction that is in progress.

Market Value The highest price in terms of money that a property will bring in a competitive and open market under all conditions requisite to a fair sale. The buyer and seller must each act prudently and knowledgeably. It is further assumed that the price is not affected by undue stimulus.

Memorandum Sometimes 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 The lowest acceptable bid amount. Not necessarily the minimum price at which the seller agrees to complete the sale.

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 setters.

Multi-Seller Auction Properties owned by many sellers, offered through a common promotional camp 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.

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 conduced on the premises of the property being sod.

Outbid To submit a bid that is higher than another buyer’s bid.

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 (PIP) The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at or prior to an auction. Sometimes called a bid package, bidder packet or due diligence package.

Proxy Bidding or Auto Bid To submit a confidential maximum bid to an online auction service’s automated bidding system. The system’s electronic “proxy”‘ will automatically increase the buyer’s bid to maintain the high bid. The proxy bidding system will stop when it has won the auction or reached the maximum bid.

Preview Specified date and time the 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.

Registered User A person who has registered as a member of an online auction service. All online auction services require registration prior to participation in an auction.

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 small 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 disclosed or undisclosed 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.

Sealed Bid/Outcry Auction A combination of sealed bid and outcry auction where the best of the sealed bidders are invited to compete in an outcry auction, allowing a final opportunity to win the property. Preferable to a Sealed Bid Sale. Protects seller and bidders.

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

Sniping Bidding in the closing minutes or seconds of an auction to outbid other buyers.

Starting Price The mandatory starting bid for a given auction, set by the seller at the time of listing.

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 of Service A legally binding agreement that outlines an auction site’s operations and policies. A registered user must agree to a site’s terms before using the service.

Terms and Conditions The printed rules of the auction and certain aspects of the Purchase & Sale Agreement that 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 The bid amount that exceeds a seller’s reserve price.See Reserve Price.

User Information Personal data provided by a user when registering for an online auction site, including name, address, e-mail and phone number.

Withdrawal Failure to reach the reserve price or insufficient bidding.