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AUCTION TERMS
(provided by the National Auctioneers Association)
AARE (Accredited Auctioneer, Real Estate): 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.
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.
Accounting of Sale: A report issued to the seller by the auctioneer
detailing the financial aspects of the 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 property 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.
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, 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 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: (or simply Auction) 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.
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.
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 NAA Education Institute.
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.
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.
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.
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.
Graduate, Personal Property Appraiser (GPPA): The professional
designation awarded by the NAA Education Institute (formerly American Marketing
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.
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.
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.
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.
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.
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 Condition: 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.
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