Terminology

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.”

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

Appraisal - A written or oral statement, independently objectively and impartially prepared by a qualified appraiser, prepared in accordance with generally accepted appraisal standards, setting forth an opinion of defined value of an adequately described asset, as of a specific date, supported by the presentation and analysis of relevant market information.

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 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 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.

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 they are willing to pay to purchase a property at auction. Bids are usually in standardized increments established by the auctioneer.

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 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.”

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.

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”.

Caveat Emptor - A Latin term meaning "let the buyer beware." A legal maxim stating that the buyer takes the risk regarding the quality or condition of the property purchased unless protected by warranty.

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”.

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”.

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.

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.

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

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.

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.

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 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.

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.

No-Sale Fee - A charge paid by the owner of a property offered at a reserve auction when the property does not sell.

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.

Preview - Specified date and time property are available for prospective buyer viewing and audits. Also known as “Open House” or “Inspection”.

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 the 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 the 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”.

Sealed Bid - A method of sale whereby 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.

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.

Uniform Commercial 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.

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