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Terminology

Terminology

Absentee Bid

A procedure associated with live auctions 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.

Absolute Auction

At an absolute auction, the property is sold to the highest qualified bidder, regardless of price. This is often called an auction "without reserve." (See also “Reserve Auction”)

Accredited Auctioneer, Real Estate (AARE)

The professional designation awarded by the NAA Education Institute to qualified real estate auctioneers. To qualify, real estate auctioneers must complete coursework as well as demonstrate their skills and experience in the field. They must also maintain their designation through continuing education and by adherence to the NAA’s code of ethics and standards of practice.

As Is, Where-Is Condition

This term means that the property is being sold in its current condition and that no inspection or other contingencies apply to the sale. Buyers are solely responsible for examining a property and making a determination as to its suitability for their intended purpose before bidding. Otherwise known as “As-Is” or “In its Present Condition.”

Auction Marketing Management (AMM)

This professional designation is awarded by the NAA Educational Institute to professional auction marketers upon completion of coursework and demonstrated understanding of current multi-channel marketing and market analysis.

Ballroom Auction

A live auction event, usually selling multiple properties or items, that is held in a meeting facility such as a ballroom.

Ballroom auctions are sometimes used to sell multiple parcels of real estate that are part of the same farm or subdivision, or properties of a similar type.

Bid Acknowledgement

A legal document executed by the high bidder confirming and acknowledging the bidder’s identify, the bid price, and the description of the property. Also known as a “Memorandum.”

Bid Assistants

In a live auction, these individuals are positioned among the attendees to answer their questions, provide them with any information or assistance they may need, and to assist the auctioneer in spotting bidders. Also known as ringmen, bid consultants, bid spotters, or groundsmen.

Bidder’s Choice

A method of selling multiple like-kind properties whereby a successful high bidder wins the right to choose one or more of the offered properties at his bid price. For example, a winning bidder with buyer’s choice of 10 parcels of farm land may choose any one of the 10 at his bid price. Or he may opt to choose two of the parcels at twice his bid price.

Once the high bidder makes a selection, the next round of bidding commences for the remaining properties.

Broker Participation

An arrangement whereby third-party brokers can register to represent potential bidders in a real estate auction. A broker representing a winning bidder is eligible for a commission upon closing of the sale, provided that broker is registered as a third-party representative of a buyer (see “Broker Registration”).

Broker Registration

The process whereby a third-party broker and the client he represents each certify in writing the broker’s representation of the client in a given sale.

Buyer’s Premium

A percentage of the high (winning) bid that is added to the bid to establish the total purchase price. An example of a 10% buyer's premium: if the winning bid is $100,000, a 10% buyer's premium is $10,000 and the total purchase price is $110,000.

A buyer’s premium may also be a flat amount.

Caravan Auctions

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

Certified Auctioneers Institute (CAI)

A prestigious designation awarded by the NAA Education Institute to professional auctioneers. To qualify, auctioneers must meet experience qualifications, complete training courses over a period of not less than three years, demonstrate their skills and knowledge through project work, and maintain their designation through continuing education and by upholding the professional and ethical standards set by the NAA.

Earnest Money

A deposit toward the purchase of real estate made by a buyer to demonstrate that he or she is serious (or earnest) about the purchase.

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.

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.

Live Auction

As opposed to an online auction, a live auction is any auction in which the auctioneer takes bids from bidders in person.

Market Value

The highest price a property will bring in a competitive and open market under fair and reasonable circumstances.

Multi-Parcel Auction

A multi-parcel (or multi-par) auction consists of multiple lots which may be sold separately, together, or in multiple combined lots, at the discretion of the auctioneer.

Multi-Property Auction

A group of properties offered through a common promotional campaign. The properties to be auctioned may be owned by one or multiple sellers.

National Auctioneers Association (NAA)

The world’s largest professional association dedicated to the advancement and professional development of auction professionals, providing critical educational resources, networking opportunities, and certification standards to the auction industry.

On-site Auction

A type of live auction which is conducted on the premises of the property being sold.

Online Auction

An auction conducted over the internet, usually with a bidding period of multiple days.

Property Information Package (PIP)

An informational package available on every property listed for sale, containing important and detailed information about the property, as well as instructions and terms for the sale. The PIP can be obtained on the listing detail page for each property, or by request from the listed agent for the property.

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” or “upset price.”

Reserve Auction

At a reserve auction, the seller either announces in advance the minimum price ("reserve") that must be achieved at the auction or reserves the right to confirm the highest bid at the end of the sale. Unless otherwise specified, auctions are reserve auctions.

Simulcast Auction

An on-site auction in which online bidders can participate by submitting bids over the internet while the auctioneer is accepting bids on-site. Also known as a “Live & Online Auction.”

Sealed Bid Auction

A method of sale wherein confidential bids are submitted to be opened at a predetermined place and time. Not a true auction in the sense that it does not allow for reaction from the competitive marketplace.

Terms & Conditions of Sale

The legal terms that govern a given sale, such as the buyer’s premium, reserve, acceptable methods of payment, time and terms of possession, and so on.

These Terms & Conditions can differ from one sale to the next depending on the type of property, the type of auction, etc., and it is very important that bidders read them, because by participating in an auction, a bidder is consenting to the specific terms of the sale.

Tie Bids

A circumstance which can occur during a live auction when two or more bidders bid exactly the same amount at the same time, which is resolved at the discretion of the auctioneer.