Glossary of Auction Terms

Here's where you can find a clarification to the auction world of words . . .

A

 

Absentee Bid - A bid on a specific lot, left in advance of the auction with someone (often a designated auction employee) by a registered bidder who is not present.

 

Agent - A person authorized by a principal to act for him or her within a scope of authority granted, and to bind the principal accordingly. An auctioneer is an example of agent of a seller.

 

As Is - It means selling assets (goods) without any warranty as to their condition and merchantability for a particular use or authenticity.

 

Auction - The sale of property by means of exchanges between an auctioneer and bidders whereby the auctioneer declares a sale to the highest, or most favorable bidder, to form a contract of sale between that bidder and the seller.

 

Auction with Reserve - An auction in which the seller, or his or her 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 - Commonly called an "absolute auction."  The property will be sold to the highest bidder regardless of price and with no contingencies. The seller may not bid, and the auctioneer may not refuse to accept a bid (except in the case of collusion or a violation of the Sherman Act).

 

Auctioneer - The person engaged by the seller to conduct the auction.

B

 

Bid - A prospective buyer’s indication, or offer of a price, he or she will pay to purchase property at auction. Bids are typically in standardized increments established by the auctioneer.

 

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.

 

Bidder - An Individual who places a bid.

 

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

 

Bid Rigging - Also called collusion (see below).  The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value.  This can be intentional or unintentional.  All auctions in the United States must adhere to the Uniform Commercial Code and are bound by the Sherman Anti-Trust Act of 1890.

 

Bidder’s Choice - A method of sale whereby the successful high bidder wins the right to choose a good or goods from a grouping of similar or like-kind goods. See also “Choice”

 

Buyer's Premium - A surcharge that is a stated percentage added to the high bid for a lot to determine the lot's final selling price to be paid by the buyer.

C

CAI - Initials found after some auctioneers' names that mean "Certified Auctioneers Institute."  The professional designation awarded to practicing auctioneers who meet the experiential, educational and ethical standards set by the NAA Education Institute.

 

Catalog – A publication advertising and describing the property available for sale at public auction, often including property descriptions, lot numbers, photographs and the terms and conditions of the sale.

 

Caveat Emptor - The two most important words for prospective buyers. It is an ancient Latin axiom that means "Let the buyer beware." It reminds buyers that they take the risk of the quality and condition of the property they purchase.

 

CES - Certified Estate Specialist.  An individual, who is a member of the National Auctioneers Association, that has attended specialized training to become knowledgeable and proficient in the advertising, setup and sale of personal property and estates using the auction method of marketing.

 

Chant - The rhythmic combination of numbers and separating filler words cried or “chanted” by the auctioneer. The chant is comprised of two numbers - the amount that has been bid for the lot, and the next higher increment that the auctioneer is seeking in the bidding.

 

Choice - A selling method auctioneers sometimes use with similar items that are offered in a "variable" lot. Bidders compete for the high bid and the highest bidder gains control. That bidder has the "choice" to select any one piece from the lot for the amount of his high bid, as well as the "choice" to select additional pieces from the lot, again paying the amount of his high bid for each additional piece taken. After this bidder has completed his selection, if any items remain in the lot, one or more additional rounds of bidding will follow the same procedure until all items in the lot have been sold.

 

Clerk - An auction worker who records each lot sold and marks the identity of the seller, buyer, and amount of the selling price. Copper State Auctions employs both paper and electronic clerks.

 

Collusion - Is an agreement, usually illegal and therefore secretive, which occurs between two or more persons to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective, forbidden by law, typically by defrauding or gaining an unfair advantage.  It is an unlawful practice whereby two or more people agree not to bid against one another or conspire to restrain trade by artificially "fixing" bids in an auction.

 

Commission - The fee the auction company charges a seller for providing certain services to sell property at auction. The commission is usually a stated percentage of the gross selling price of the property and is variable.

 

Consignment auction - An auction comprised of goods offered for sale by multiple individual sellers.

 

Consignor - A seller who places goods for sale with an auction company to be sold at auction.

D

 

Due Diligence - The process of investigating and gathering information necessary to make an informed and intelligent decision about an important matter, such as a prospective buyer examining the authenticity, condition, quality, and status of property to be sold.

E

 

Estate - A person's property, both real (i.e. real estate) and personal. One's property is his estate whether the person is alive or dead.

 

Ethical - The number one characteristic of the professional auctioneer and auction company.

G

 

GPPA - Initials found after some auctioneers’ names that mean "Graduate Personal Property Appraiser." A designation an auctioneer can earn by meeting certain educational and experience requirements as defined by the National Auctioneers Association.

H

 

Hammer Price - The selling price of a lot to the highest bidder.

 

House number - A bidder number used by the auctioneer to clerk to passed lots.

I

 

Introducer - At some auctions, a member of the auction crew (not the auctioneer) will describe each lot to the audience before it is opened to bidding.

J

Jump the Bid - A bidder strategy to knock out competition by bidding an amount higher than what the auctioneer is requesting.  For example, if an auctioneer has a $100 bid and is asking for a $125 bid, the bidder can “jump the bid” by offering a $200 bid, thereby reducing or eliminating competing bidders.

L

 

Listing Broker/ Listing Agent - A real estate broker, or agent, who has a listing on real property.

 

Lot - A defined article (good) or group of articles (goods) that is the subject of a separate sale. Each offering by the auctioneer is a lot. 

M

Market Value - A term that refers to the highest price an article will bring in an open, fair, and competitive selling environment.  At each auction, market value is set for every good that receives a bid.  Market value is instrumental at determining an items worth – market value can be more helpful than an appraisal to buyers and sellers.

 

Minimum Opening Bid - An auction in which the auctioneer will only accept bids at, or above, the amount of the disclosed, opening bid.

N

 

NAA - National Auctioneers Association, an organization of over 6,000 professional auctioneers headquartered in Overland Park, Kansas. www.auctioneers.org.

 

No-Sale Fee– A charge paid by the owner of property offered at a reserve auction when the property does not sell. Also referred to as a reserve fee.

O

On-Site Auction - An auction conducted on the premises where the property is located.

 

Opening Bid– The first bid offered by an auctioneer or bidder at an auction.

 

One Money - When two or more items (goods) are sold in a single lot for the highest amount bid.

P

 

Pass - A lot that fails to receive a bid and is no longer for sale.

 

Preview - A designated time period for prospective buyers to view and inspect the property to be offered for sale. Also known as inspection period.

 

Public Auction - An auction that is advertised and open to the public to bid on the property offered for sale.  All Copper State Auctions events are public auctions.

 

Principal - A person who authorizes another as an agent.  (See Agent)
 

R

Reproduction - An exact or close imitation of an item or its likeness.

 

Reserve - A predetermined, minimum threshold price a seller will accept to sell certain property at auction. It is a safeguard against a sacrifice of the seller's assets.  The reserve price can be stated and made public before the auction or kept private and not shared with bidders or buyers.

 

Retraction - When a bidder withdraws a bid prior to the auctioneer declaring an item sold.

 

Ring Man – An auction worker who spots bids and assists in the flow and presentation of items or lots to be auctioned.

S

 

Sold! - Music to an auctioneer's ears.  It is also the word that acts as an oral, binding contract between the buyer and seller

 

Starting the Bid - When an auctioneer asks for an opening bid to start the bidding process.

T

Terms - The provisions for the auction that will become the binding details of the contracts of sale, formed between the seller and respective high bidders.  Terms are posted and printed on bidder cards and announced at the beginning of the auction.

 

Times the Money - A selling method whereby an auctioneer sells multiple items in one lot under the term that the lot's final price will be calculated by multiplying the highest bid by the number of items comprising the lot.

W

Warranty - A promise that a statement of fact is true.

 

Where Is - It means exactly as it sounds - item is sold on the spot, in its present condition and immediately becomes the responsibility of the winning bidder.

 

Withdrawal - When an auctioneer does not sell a lot because it failed to reach its reserve price, has become damaged, or is no longer for sale.

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