Learn auction terminology and be a better real estate buyer and seller.
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. American 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 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. 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 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.
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.
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.
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.
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.
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.
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.
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. 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.
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.
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.
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.
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.
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”.
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”.
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"
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.