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. |
|
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. |
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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. |
|
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. |
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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. |
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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. |
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Auction Subject to Confirmation
|
(See "Reserve Auction." |
|
Auction Value |
The price which a particular
property brings in open competitive bidding at public auction. |
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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. |
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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. |
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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. |
|
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. |
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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. |
|
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. |
|
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. |
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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. |
|
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. |
|
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. |
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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. |
|
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. |
