Glossary of Auction Terms

glossaryGlossary of Auction Terms

B C
D E
F G
H I
J K L M
N O
P Q R
S T
U V W
X Y Z

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 absentee bids 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.”

Accounting of Sale

A report issued to the seller by the
auctioneer or auction company detailing the financial aspects of the
auction.

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 of continuing education every three
years.

Agent

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

America Bankruptcy Institute
(ABI)

The American Bankruptcy Institute is
the largest multi-disciplinary, non-partisan organization dedicated
to research and education on matters related to insolvency. ABI was
founded in 1982 to provide Congress and the public with unbiased
analysis of bankruptcy issues.

America Society of Appraisers
(ASA)

The American Society of Appraisers
is an international organization of appraisal professionals and
others interested in the appraisal profession. ASA is the oldest and
only major appraisal organization representing all of the disciplines
of appraisal specialists.

Appraisal

The act or process of estimating
value.

Appraisal Foundation, The

A not-for-profit organization
dedicated to the advancement of professional valuation, established
by the appraisal profession in the U.S. in 1987. Since its inception,
the Foundation has worked to foster professionalism in appraising. It
is authorized by Congress as the source of appraisal standards and
appraiser qualifications.

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 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 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, the individual may not actually conduct the sale but
is directly responsible for all aspects of marketing the property.

Auction Marketing

The method of marketing assets
utilizing the auction method of sale.

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 Technology Specialist
(ATS)

A professional designation awarded
by the NAA Education Institute to help professional auctioneers
understand today’s technology and how to use it to improve their
business. ATS auctioneers gain experience in conducting live and
online static auctions. In order to be designated with the ATS,
auctioneer-scholars are required to complete 21 classroom hours,
proof of at least three online auctions and 24 hours of continuing
education every three years.

Auction Value

The price that a particular property
brings via 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. Also known as a “Contract Auctioneer.”

B


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.

Benefit Auction Specialist (BAS)

A professional designation awarded
by the NAA Education Institute designed to teach professional
auctioneers the planning techniques that create successful benefit
auctions. BAS auctioneers learn marketing skills and create a
business strategy to build their clientele and profits. In order to
be designated with the BAS, auctioneer-scholars are required to
complete 21 classroom hours, a detailed written auction summary
report, proof of at least six benefit auctions and 24 hours of
continuing education every three years.

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 Assistants

Individuals of a live auction team
whose primary responsibility is to accurately interpret and
effectively communicate buyer participation to their auctioneer. They
should also be qualified to assist prospective bidders with the
necessary information to make a better informed buying decision. Also
known as “ringmen”, “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. See “Collusion”.

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. Also referred to
as “bidder packet” or “due diligence packet.”

Bidder’s Choice

A method of sale whereby the
successful high bidder wins the right to choose an asset or assets
from a grouping of similar or like-kind assets. After the high
bidder’s selection, the asset is deleted from the group, and the
second round of bidding commences, with the high bidder in round two
choosing an asset, which is then deleted from the group and so on,
until all assets are sold. Also known as “Buyer’s
Choice.”

Bookkeeper or Clerk

The individual 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.

C

Caravan Auctions

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

Carrying Charges

The costs involved in holding a
property that is intended to produce income (either by sale or rent)
but has not yet done so, i.e., insurance, taxes, maintenance,
management. Also known as “holding costs”.

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 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.

Certified Estate Specialist (CES)

A professional designation awarded
by the NAA Education Institute to help professional auctioneers
understand how to properly conduct and deal with the settling of
estates. The course also educates professional auctioneers on working
with family members and dealing with lawyers and accountants. In
order to be designated with the CES, auctioneer-scholars are required
to complete 21 classroom hours and complete 24 hours of continuing
education every three years.

Clerk

An individual 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.
Also known as “Terms & Conditions”.

Conference and Show (C&S)

Annual conference and exposition of
the National Auctioneers Association. Also known as “International
Auctioneers Conference & Show”.

Continuing Education Units (CE’s
or CEU)

A measure used in continuing
education programs, particularly those required in a licensed
profession in order for the professional to maintain the license.

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, 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.

D

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.

E

Education
Institute (EI)

NAA members are selected by the NAA
Board of Directors to be Trustees of the Education Institute and
carry out the association’s mission of continuing education to
NAA members.

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

Federal Deposit
Insurance Corporation (FDIC)

The Federal Deposit Insurance
Corporation (FDIC) is an independent agency created by the Congress
to maintain stability and public confidence in the nation’s financial
system by insuring deposits, examining and supervising financial
institutions for safety and soundness and consumer protection, and
managing receiverships.

Federal Home Loan Banks (FHLB)

The FHA provides mortgage insurance
on loans made by FHA-approved lenders throughout the U.S. and its
territories. FHA insures mortgages on single family and multifamily
homes including manufactured homes and hospitals. It is the largest
insurer of mortgages in the world.

Federal Housing Administration
(FHA)

The FHA provides mortgage insurance
on loans made by FHA-approved lenders throughout the U.S. and its
territories. FHA insures mortgages on single family and multifamily
homes including manufactured homes and hospitals. It is the largest
insurer of mortgages in the world.

G

Graduate Personal
Property Appraiser (GPPA)

The professional designation awarded
by the NAA Education Institute to qualified property appraisers 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 GPPA, auctioneer-scholars are
required to complete 35 classroom hours, a detailed written appraisal
report and proof of at least two affidavits of appraisals. This
designation also requires 24 hours of continuing education every
three years.

H

Hammer Price

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

I

Intellectual
Property (IP)

IP is a term referring to a number
of distinct types of legal monopolies over creations of the mind,
both artistic and commercial, and the corresponding fields of law.
Under IP law, owners are granted certain exclusive rights to a
variety of intangible assets, such as musical, literary, and artistic
works; discoveries and inventions; words, phrases, symbols and
designs.

International Auctioneer Champion
(IAC)

Annual contest hosted by the
National Auctioneers Association at its Conference & Show for
bid-calling auctioneers. Each year, one female and one male
auctioneer is declared the winner of the IAC.

International Society of
Appraisers (ISA)

The ISA is a not-for-profit,
member-driven association formed to support ISA member needs and
serve the public by producing highly qualified and ethical appraisers
who are recognized authorities in professional personal property
appraising.

L

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 their listing agreement.

Livestock Marketing Association
(LMA)

The LMA is an association committed
to the support and protection of the local livestock auction markets
and the livestock marketing industry.

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.

Master Personal Property
Appraiser (MPPA)

A professional designation awarded
by the NAA Education Institute to help professional auctioneers learn
the responsibilities of appraising assets. Designees are taught to
conduct a complete and appropriate appraisal, as well as taught to
know the various factors that affect the value of appraised items.
MPPA designees specialize in one or more of the following areas:
antiques & estates, plant machinery & equipment, construction
& agricultural equipment or small business valuation. In order to
be granted an MPPA designation, the auctioneer must already be
credentialed with the GPPA.

Memorandum

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.

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.

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 multiple
sellers, offered through a common promotional campaign and auctioned
in a single event.

Multiple Listing Services (MLS)

The MLS is a suite of services that
enables brokers to establish contractual offers of compensation
(among brokers); facilitates cooperation with other broker
participants; accumulates and disseminates information to enable
appraisals; and is a facility for the orderly correlation and
dissemination of property listing information to better serve
broker’s clients, customers and the public.

N

National
Association of Realtors (NAR)

The core purpose of the NAR is to
help its members become more profitable and successful.

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.

National Auto Auctioneers
Association (NAAA)

Founded in 1948, the National Auto
Auction Association represents more than 317 auto auction companies,
both domestic and international, with more than 8.9 million units
sold each year.

No-Sale Fee

A charge paid by the owner of
property offered at a reserve auction when the property does not
sell.

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”.

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.

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
“reserve price”.

S

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 where by
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 marketplace.

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”

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.

Trustee’s Sale

A sale at auction by a trustee.

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.

Uniform Standards of Professional
Appraisal Practice (USPAP)

USPAP can be considered the quality
control standards applicable for real property, personal property,
intangibles and business valuation appraisal analysis and reports in
the U.S. and its territories. USPAP was first developed in the 1980s
by a joint committee representing the major U.S. and Canadian
appraisal organizations.

US Bureau of Alcohol, Tobacco,
and Firearms (ATF)

A unique law enforcement agency of
the U.S. Department of Justice that protects our communities from
violent criminals, criminal organizations, the illegal use and
trafficking of firearms, the illegal use and storage of explosives,
acts of arson and bombings, acts of terrorism, and the illegal
diversion of alcohol and tobacco products.

W

Withdrawl

Failure to reach the reserve price
or insufficient bidding.