Auction Glossary of Terms
An absentee bid allows the bidder to be a part of the bidding process without actually having to be at the site. Normally, the bidder will send in their offer on a specific item before the auction is even held. The auction company or auctioneer handles the bid under a set of guidelines. These guidelines vary between each auction company or auctioneer. This is also often referred to as proxy bids.
An absentee bidder is an individual, a group or an organization that submits a bid without being present at the auction. They say the top price they are willing to pay for an asset in writing or orally prior to the auction.
An absolute auction is where items and property are sold to the highest bidder. There are no condition or price limits. Sellers are not allowed to bid through an agent or personally to cheat the buyers. This type of auction is also called an auction without reserve where all lots in the auction will not have any reserve values.
Accounting of Sale
The auction company or auctioneer send out a report to the seller that covers the financial details of the auction. This report is called the accounting of sale.
Accredited Auctioneer Real Estate (AARE)
Someone can be designated with AARE from the NAA Education Institute. This professional designation is only given to auctioneers who are qualified for real estate auctions. They must meet specific standards for their education and experience to qualify. Afterward, the auctioneer must follow a strict code of ethics to maintain their designation. Initially, the auctioneer must create a written summary report of the auction, finish 42 hours of training and host 10 at least auctions. Once they have the designation, the auctioneer must receive 24 hours of continuing education from the NAA Education Institute every three years.
An agent is someone who acts for an entity, organization or individual.
American Bankruptcy Institute (ABI)
The American Bankruptcy Institute (ABI) is the biggest non-partisan group dedicated to researching and educating about bankruptcies. It was started in 1982 to help the general public and government analyze bankruptcies in a non-biased way.
America Society of Appraisers (ASA)
Known as the ASA, the American Society of Appraisers is an organization that operates internationally to help professionals in the appraisal industry. This is the oldest organization in existence for appraisal professionals. In addition, it is the only major appraisal group to represent all disciplines and aspects of the field.
An appraisal is a statement that is given orally or in writing. It must be impartially, objectively and independently created by a qualified appraiser according to the applicable regulations. In the statement, the appraiser sets forth their opinion about the value of an asset at a specific date in time. This opinion is supported through market information and a detailed analysis.
Appraisal Foundation, The
The Appraisal Foundation is a non-profit that was created by the appraisal profession in 1987. It seeks to advance professional valuation by fostering professionalism among appraisers. This organization was authorized by the United States Congress to set appraiser qualifications and appraisal standards.
To become an auctioneer, individuals must have training and experience. An apprentice auctioneer trains under a licensed auctioneer until they can get their license.
When a property is sold as is, it means that the seller does not provide any warranties for the condition of the properties. It is up to the buyer to examine and inspect the property before they buy it. As is properties may also be labeled with "in its present condition" or "as is, where is."
An auction is a public forum where property is sold openly and competitively. Known as an auction sale or a public auction, where any auction sells (auctions off) items through a bidding system.
An auction block is normally a raised platform or a type of podium where the auctioneer stands. From this spot, they carry out the auction. To put something on the auction block means to sell an item at auction.
Auction Listing Agreement
An auction listing agreement is a contract between the seller and the auctioneer. Basically, this contract says that the seller allows the auctioneer to sell their item or items at the auction. It includes the terms of the agreement and the rights of both parties.
An auction marketer is someone who works with sellers to market the properties at the auction. The marketer may or may not conduct the sale, but they are responsible for marketing the property.
Auction marketing refers to the process and techniques used to market items before and at the auction.
An auction plan is put in place for all activities before, during and after the auction. (pre-auction, at-auction, post-auction)
The auction price refers to the price through the auction marketing.
Auction Subject to Confirmation
This is when the details of an auction are not finalized yet where things can change such as adding/modifying/removal of lots.
Auction Technology Specialist (ATS)
An auction technology specialist is a title that is designated by the NAA Education Institute. It shows that the specialist has technological skills and equipment for their auction business. An ATS auctioneer garners experience by conducting online static auctions and live auctions. To receive this designation, the ATS must complete a minimum of three online auctions. They must initially finish 21 classroom hours of education. Following this, the auction technology specialist must complete 24 hours of continuing education every three years.
Auction With Reserve
When an auction has a reserve, it means that the seller or the agent's seller keeps the right to decline or accept bids. Basically, the seller chooses a minimum acceptable price that is called the reserve price. If that price is not reached, then the seller reserves the right to accept or decline any or all bids. The reserve price may or may not be disclosed by the seller.
Auction Without Reserve
Please look at the definition for an absolute auction.
An auctioneer is the person contracted by the seller to hold or run an auction. While the auctioneer is responsible for conducting the auction, they may not call the auction.
Known as a contract auctioneer, the auctioneer subcontractor is someone who is hired by the principal auctioneer to work the auction.
A ballroom auction is an event where one or more assets are sold in a meeting room facility.
Bank Letter of Credit
This refers to a letter from a bank that shows that a specific person or organization can receive a specific amount of credit. A bank letter of credit is normally given to a potential buyer who is not going to pay with currency at the auction. Most auctions will require to see this at registration before bidders can participate and bid at the auction.
Benefit Auction Specialist (BAS)
This designation is given by the NAA Education Institute for professional auctioneers who are skilled at benefit auctions. The auctioneer must show that they are talented at marketing and running a business for their clientele. To receive the BAS designation, the auctioneer must create a written auction summary report and show proof that they have held six or more benefit auctions. In addition to completing 21 classroom hours initially, the benefit auction specialist must also complete 24 hours of continuing education every three years.
A bid is the amount that a potential buyer offers for an item or property. They basically say the price that they are willing to pay. Each bid is normally in a standardized increment that is set by the auctioneer. Once a bid is placed, the bidder is required to pay for the winning bid if the bidder wins the lot. Otherwise penalties may occur set by the auctioneer's terms.
A bid acknowledgment refers to a form that is filled out by the highest bidder. In the acknowledgment, the bidder confirms their identity, the agreed on price and the description of the property. This form is also known as a memorandum.
A bid assistant is a part of the live auction team. Their main job is to ensure effective communication between the buyers and the auctioneer. They must be experienced at assisting bidders through education and providing the necessary information. In the auction industry, a bid assistant is also called a bid spotter, ringman or groundsman.
The bid caller is the individual who calls, auctions or "cries" the property for sale. They recognize people bidding on the property and acknowledge the highest bidders. Often, the bid caller is called the auctioneer.
The bid history is basically a list of all of the bids that have been made during or after the auction.
Big rigging refers to an unlawful process. When bid rigging happens, it is because two or more people agree not to bid against each other in an attempt to keep the price down. Bid rigging is also known as collusion.
The bidder number is a number that is given to each person who is registered for the auction. Ground or floor bidders are provided with paddles with their bidding numbers on the paddles. Ground bidders will raise their bidding paddles when placing bids.
Prospective bidders are given something that is known as a bidder package before they buy an item at the auction. This packet includes instructions and information about the property. A bidder package is also known as a due diligence packet or a bidder packet.
This is a type of sale where the highest bidder gets the right to choose the asset or several assets from a group of similar assets. Once the highest bidder selects their choice, the asset is deleted from the group. Afterward, a second round of bidding starts. The highest bidder in the second round gets to choose an asset as well and a third round commences. This process continues until all of the assets have been sold. Bidder's choice can also called buyer's choice.
Bookkeeper or Clerk
The clerk or the bookkeeper is responsible for all of the paperwork and accounting that goes on with an auction sale.
With broker participation, third-party brokers can register prospective bidders at the auction. They receive a paid commission from the auction firm or the owner of the property if it sells.
A buyer's broker is the real estate broker who acts on behalf of the buyer. Since they are the buyer's agent, the buyer's broker is typically paid by the buyer for their services.
A buyer's premium is a percentage of the flat fee or high bid that is added on to the highest bid's cost. This premium determines the total contract price that the buyer ends up paying.
Caravan auctions are on-site auction campaigns that are advertised through a promotional campaign and are offered in a series.
Carrying charges are costs that are incurred when a property would normally be producing an income through a sale or rent. These costs may include management, taxes, insurance or maintenance fees.
Catalog or Brochure
A public auction includes an advertising publication that lists all of the items available for sale. The catalog or brochure will typically include the property descriptions, photos and the terms of the sale.
This phrase comes from Latin and essentially means to let the buyer beware. Legally, it means that the buyer incurs all of the risks of buying a property. Unless the asset is protected by a warranty, the buyer carries the risks regarding the condition or quality of the asset.
Certified Auctioneers Institute (CAI)
The CAI designation is provided by the NAA Education Institute and is given to practicing auctioneers. This individual must have at least two years of experience working as a full-time auctioneer. In addition, they must study 120 classroom hours for the designation and attend three years of CAI courses. Once the special projects and educational requirements are completed, the individual must perform 24 hours of continuing education every three years to maintain this designation.
Certified Estate Specialist (CES)
A certified estate specialist receives their designation from the NAA Education Institute. This certification is for auctioneers who are skilled at settling estates. During the 21 hours of classroom education, the auctioneer learns how to work with accountants, family members and lawyers. They must take an addition 24 hours of schooling every three years to retain their designation.
A clerk is a person who is employed by the auction company or principal auctioneer. It is their job to record everything that is sold, who it is sold to and the price it receives.
Collusion refers to a completely illegal practice where two or more individuals deflate the asset's price. They agree not to bid against each other so that the price ends up being lower. Collusion could also refer to the seller and the auctioneer colluding to increase the value of the asset. In this case, the auctioneer accepts a fake bid from the seller or someone connected to the seller. Like collusion among prospective buyers, it is unlawful for the seller and the auctioneer to artificially inflate the price.
The commission is a fee that the seller pays to the auctioneer. This fee covers the auctioneer's services, and it is normally a percentage of the gross price that the property sold for. Prior to the auction, the commission amount is set in the listing agreement.
Conditions of Sale
This term refers to the terms and conditions that are legally required. Often, the conditions of sale include rules about the terms, reserves, acceptable methods of payments, possession and buyer's premium. This information is normally announced by the auctioneer or included in the advertisements. The conditions of sale are also known as the terms and conditions.
Conference and Show (C&S)
An annual conference is held by the National Auctioneers Association. It is known as the conference and show or the International Auctioneers Conference and Show.
Continuing Education Units (CEU)
Continuing education units are used to measure an auctioneer's progress through an educational program. Most certifications and designations require the individual to get a certain number of continuing education units every three years.
A contract is a legal agreement between two different parties that defines their relationship and legal obligations.
This refers to a type of real estate broker who works with the prospective buyer and the auction company. The cooperating broker is paid a commission by the buyer only if the buyer wins the asset and closes on the property. The cooperating broker is also known as a participating broker.
The critical path is a series of tasks done by designated parties like the auction contractor on set dates.
A dual agency can represent both the buyer and seller at the same point in time.
Due diligence refers to the process when information is collected about the legal status and condition of an asset that is being sold.
Education Institute (EI)
The Education Institute is selected by the NAA Board of Directors to work on the organization's goal of providing education for NAA members.
Escrow is when a third party holds the money from a sale until the seller delivers the merchandise to the buyer.
An estate sale refers to the sale of property that is left behind following the death of an individual. This may include the sale of real property or personal property.
Federal Deposit Insurance Corporation (FDIC)
The United States Congress created the FDIC to operate independently and ensure the stability of the country's financial system. They carry out this task by providing deposit insurance and supervising financial institutions. The FDIC manages receiverships and provides consumer protection.
Federal Housing Administration (FHA)
The Federal Housing Administration (FHA) offers insurance for mortgage loans that are given by FHA-approved lenders in the United States. The FHA insures a variety of single family homes, hospitals and multifamily homes. This organization is the largest insurer of mortgages in the entire world.
Grading is the way that the physical condition of an item is determined. Each type of item uses a different style of grading system.
Graduate Personal Property Appraiser (GPPA)
This is a designation that is given to property appraisers who meet requirements set out by the NAA Education Institute. To achieve the GPPA designation, the auctioneer must finish 35 hours of education and create a detailed appraisal report. They also must show proof of two or more affidavits of appraisals. Once the designation has been given, the appraiser must complete 24 hours of coursework every three years.
The hammer price is the price set by the highest bidder. The auctioneer recognizes this price right before they drop the gavel or hammer.
Intellectual Property (IP)
Intellectual property refers to a legal monopoly over an item or idea that has been created by the mind. It is protected by law and provides the owner with the exclusive right to intangible assets like artistic, musical or literary works. The owner of the intellectual property right could also own an invention, discovery,design or phrase.
International Auctioneer Champion (IAC)
Each year, the National Auctioneers Association hosts a contest at its Conference and Show. The contest is for bid-calling auctioneers. One woman and one man are declared the International Auctioneer Champion if they win the competition.
International Society of Appraisers (ISA)
The International Society of Appraisers is a non-profit organization that supports ISA members and the public. Their goal is to help professional, ethical appraisers.
The listing broker is basically a real estate broker who works with the auction company. Their job is to list a property according to the auction agreement and the listing agreement.
Livestock Marketing Association (LMA)
The LMA is an organization that supports and protects livestock auctions. It works with the livestock marketing industry.
The lot is an item or a collection of items for sale at the auction. Each lot is given a lot number that it is referenced by.
The market value refers to the highest price that an asset can get on the open marketplace. This competitive price assumes that the sale is fair and both parties are acting prudently. It also assumes that the price is not affected by some outside stimulus.
Master Personal Property Appraiser (MPPA)
The NAA Education Institute offers the MPPA designation for professional auctioneers who create appraisals. Individuals in this program learn how to create a proper appraisal according to numerous factors. Typically, MPPA designees specialize in an area like construction equipment, antiques, estates, plant machinery, small business valuation, agricultural equipment or plant equipment. To receive this designation, the auctioneer must already have a credential from the GPPA.
The memorandum is an agreement signed by both parties in the contract room or on the auction floor. It may also be called the broker acknowledgment or the bidder acknowledgment.
Minimum Bid Auction
A minimum bid auction refers to an auction where the auctioneer takes all bids that met or exceed the disclosed price. The minimum price is shown in the brochure and is announced at the auction.
A multi-property auction is where multiple properties are provided through a single promotional campaign. These properties may be owned by one or multiple sellers.
A multi-seller auction is when properties are owned by multiple sellers and advertised through a single promotional campaign. Later, they are all auctioned off at one event.
Multiple Listing Services (MLS)
The MLS is a listing service that allows brokers to create contractual compensation offers between different brokers. This makes it easier for brokers to cooperate with each other and disseminate appraisal information. The MLS helps to organize listing information in a way that is better for the broker, customers, the broker's clients and the public.
National Association of Realtors (NAR)
The NAR's main goal is to help NAR members become successful and earn more.
National Auctioneers Association (NAA)
This organization is made up of individual auctioneers. They work together to promote the interests of members and design ethical standards. The National Auctioneers Association promotes regulations around auction selling and educates the public about the benefits of using an auction. In general, the NAA works to improve the business conditions for the auction industry.
National Auto Auctioneers Association (NAAA)
This organization was started in 1948. The National Auto Auction Association includes more than 317 auctioning company in the country and around the world. Through the NAAA, 8.9 million items are sold annually.
A no-sale fee refers to a charge that the property's owner pays if their property does not sell at a reserve auction.
An on-site auction is conducted at the location where the property is being sold.
The opening bid is the initial bid placed by a prospective buyer at the auction. As the initial bid, it is often much lower than the closing bid will be.
Other Real Estate Owned (OREO)
This refers to real property that is owned by a financial institution, but not directly used or related to the business. OREO assets are listed as non-earning assets on a balance sheet and are often from a foreclosure by a borrower. If the property was used as collateral, it is handed over to the banking institution.
Please look at the definition for a cooperating broker.
A preview is a set time or date where the potential buyers can view, inspect or audit the items. The preview is also known as the inspection or open house.
Real Estate (RE)
Real estate is also known as real property. In legal circles, this term includes the land as well as any improvements to the land. This could include wells, buildings, fences or other improvements that are immovable.
Real Estate Owned (REO)
An REO is a type of property that is owned by a lender. It is normally retained by the bank after the property did not sell at a foreclosure auction. Basically, the bank sets an opening bid at the auction that matches the loan's outstanding amount. If the property does not reach the reserve price, the bank repossesses the property. Once this happens, the property is listed as REO in the bank's accounts and considered a non-performing asset.
The referring broker is a real estate broker who did not list the property. They recommend the auction company to the potential seller in return for a flat fee commission.
During a real estate auction, regrouping allows the bidder to combine multiple parcels of land that were previously chosen by other bidders. This creates a larger parcel and is often used with bidder's choice.
The reserve is the minimum amount that a seller will accept for the property. The reserve is also called the reserve price.
A reserved auction is an auction where all the lots have reserved prices. As long as the reserved prices are not met, the lots will not be sold despite having bids on them.
A sales manager is someone who is tasked with organizing all of the details of the auction. Chosen by the auction company, the sales manager is also called the project manager.
This process allows confidential bids to be sent in. Later, these bids are opened at a predetermined place. It is not considered a true auction because it does not allow for the competition and reactions of the marketplace.
The seller is the person or entity that legal gains ownership of the asset. They gain any interests, rights or benefits associated with the personal or real property.
Subject to Confirmation
This is when the details of an auction are not finalized yet where things can change such as adding/modifying/removal of lots.
A tax sale is when a governmental organization sells property publicly because property taxes were not paid.
Terms and Conditions
The terms and conditions refer to the rules of the auction, purchases and sales. These are distributed or read out to potential bidders before the auction begins.
A tie bid is when multiple bidders offer the same amount for an item at the same moment. It can only be resolved by the auctioneer.
This is an auction sale that is done by a trustee.
Uniform Commercial Code (UCC)
The Uniform Commercial Code was first created in 1952. It was designed to harmonize laws regarding commercial transactions and sales in the United States.
Uniform Standards of Professional Appraisal Practice (USPAP)
The USPAP is a type of quality control for personal property, business valuation appraisal analysis, real property, intangibles and reports. It was started in the 1980s through a group of appraisal organizations in the United States and Canada.
US Bureau of Alcohol, Tobacco, and Firearms (ATF)
The ATF is a law enforcement that is run by the United States Department of Justice. It is designed to protect the country from criminal organizations or criminals. Because of this, the ATF prevents the illegal sale or use of firearms, explosives, tobacco and alcohol products.
Withdrawal refers to times when the reserve price is not met due to insufficient bidding.