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Real Estate Auction Glossary (A-L)

A

absentee bid

– when, for whatever reason, a bidder cannot or chooses not to attend an auction, they are allowed to place a bid on a property from a remote location. The bid is usually submitted prior to the beginning of the auction by the bidder or their representative. The individual auction company sets the terms and conditions under which an absentee bid can be placed. Accordingly, the bidder who is

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placing the absentee bid must follow all the terms and conditions established by the auction company.

absentee bidder

– the person who is placing the absentee bid. It can be the bidder or their representative, and the person must make the bid in advance of the auction. The bid can be submitted in writing or orally, and sets the maximum amount the bidder is willing to pay for the property.

absolute auction

– a type of auction where the property goes to the highest bidder, regardless of the value of the property or the amount of the bid. Sellers or their agents are not allowed to bid on their own properties in an absolute auction.

Accounting of Sale

– a formal document completed by the auctioneer that reports the details of the sale and is issued to the seller. The document contains the full financial particulars of the sale.

agent

– a person authorized to act as a representative in place of another person or business entity

appraisal

– the estimated value of a property. However, this value must be obtained through an appraiser who has obtained their license by a combination of formal education and experience.

apprentice auctioneer

– a person who has not yet obtained enough experience at auctioneering, so gets that experience by performing auctions under the supervision and guidance of a more experienced auctioneer

“As Is”

– a legal term that is used for a property when the property is being sold exactly in its present condition, and no guarantees or warranties are provided or given that the property is suitable for any specific intended use. This type of condition of sale places all the responsibility on the bidder and buyer to examine the property prior to any bidding.

auction

– the sale of property by a competitive bidding process. There are different types of auctions, but all are done with an established set of rules and are organized.

auction block

– the place where the auctioneer is located, whether it is a stand, podium, or platform, and from where the auction is conducted. To place an item “on the auction block” means to put the item up for bidding at an auction.

auction listing agreement

– a contract between the seller and the auctioneer that spells out the details of the terms and conditions of the auction. It states the rights and responsibilities of both the seller and the auctioneer.

auction marketer

– a person who connects with sellers of property, then forms contracts for the purpose of selling their property at auction. Auction marketers of real property may not be the person who has formed the contract, yet is still responsible for maintaining the terms of the contract.

auction marketing

– the advertising of a property that will be available for bidding at a public auction

auction plan

– every auction has a plan that consists of three basic parts: the pre-auction setup, auction day events, and post-auction activities

auction price

– this is the final sale price of a property at an auction, not to be confused with auction value

auction sale

– see auction

 

auction value

– the price at which a property is valued for public auction. The auction value may be higher or lower than the auction price

auction with reserve

– the reserve is the minimum price the seller is willing to accept, and is established prior to the auction. However, the seller can accept bids lower than the reserve price if they choose, and can cancel the auction of the property completely but must be done before the auctioneer announces “Sold!”  See also Reserve Auction

auction with no reserve

– See No-reserve auction

auctioneer

– the person who conducts the auction. This person is authorized by the seller and oversees how the auction is conducted and that all bidding procedures are adhered to during the auction. Usually this person is the one who calls out the bids and declares the property to be finally sold.

auctioneer subcontractor

– this is a person hired by the primary auctioneer to perform the duties and responsibilities of the primary auctioneer

B

ballroom auction

– an auction locale that often is a large meeting room in a hotel, convention center, or other meeting facility. This is one of the preferred types of locations for conducting Internet auctions

bank Letter of Credit

– this is a letter originating from a bank that extends a specific amount of money to be available to a bidder at an auction who is not using cash to pay for a sale

bid

– an amount of money a bidder states he is willing to pay for the property up for auction. In an auction, the auctioneer will set the amount that a bidder can raise by and is set prior to the auction. For example, the next bid offer will be set to be a minimum of $2500 more than the previous bid in order to be accepted by the auctioneer.

bid acknowledgement

– the winner of an auction is required to enter into an agreement regarding the details of the sale. Information included in the agreement is an identity confirmation of the winner’s name, the final bid amount, the amount of the buyer’s premium that is due, the amount of the required deposit, and a summary description of the specific property won.

bid assistant

– a trained assistant to whose purpose is to assist the auctioneer in spotting bids and to provide information about the auction that will help bidders to make a purchasing decision. Though a bit of a misnomer, as they are really auctioneer assistants, bid assistants will be found strategically placed throughout the auction floor.

bid caller

– see auctioneer

bid consultant

– see bid assistant

bid memorandum

– see bid acknowledgement

bidder number

– this is the number assigned to each bidder upon registration for the auction

bidder package

– a series of documents detailing bidding instructions and other information about a specific property to be auctioned.

bid rigging

– a conspiracy by two or more people intended to inflate or deflate the final sale price of a property. This is an illegal auction act, and it usually is done by two or more people either bidding against one another or choosing not to bid against each other. Auctioneers can be involved in bid rigging when they accept a false bid for the seller with the intention of manipulating the final sale price.

bid spotter

– see bid assistant

bidder’s choice

– an auction procedure that has a collection of similar properties grouped together, then the high bidder is able to select which of the properties in the group they will buy. Then the next round of bidding on the group will take place, continuing until all properties in the group are sold.

bookkeeper

– see clerk

broker participation

– a practice where brokers and agents are invited to work to register potential sellers for an auction. The brokers or agents are paid a commission rrom the property owners or the auction house.

buyer’s broker

– a person who is authorized to act on behalf of the buyer and who the buyers pays for this service

 

buyer’s premium

– an amount added to the final sale price of a property. This amount is publicized prior to the auction, and can be a flat fee or a percentage of the final sale price of the property. The final bid plus the buyer’s premium is the total amount the buyer will pay for the property.

C

caravan auction

– a type of auction that schedules a series of auctions and are held at a number of locations that will be promoted through an advertising campaign. The auctioneer will travel to each of the locations to conduct the auctions.

carrying costs

– expenses that are a necessary part of holding real estate property. Examples of such expenses are property taxes, home insurance, cost of maintenance of the property, and expenses to manage the property.

catalog or brochure

– a listing of all the available properties up for auction. The catalog or brochure contains the description and photographs of each property, as well as a list of the terms and conditions of the auction and sale. Not to be confused with a bidder package, which is a detailed description of a specific property.

clerk

– a person hired by the auction firm to take account of the various auction transactions. This includes registering bidders prior to the auction, recording the details of each property sold, and keeping track of bidders and their bids.

collusion

– see bid rigging

commission

– a fee a seller pays to the auctioneer for being able to have their property sold at an auction. Generally a percentage of the total, final, gross sale price of the property, it is a number that is specifically stated in the listing agreement before the auction takes place.

condition(s) of sale

– these are the specific legal terms that the sellers, buyers, bidders, and auctioneers are bound to by law and are set forth prior to the beginning of the auction. The group of terms forms a binding contract between the parties, and may include any the of the following: accepted forms of payment, the amount of the buyer’s premium, terms of possession of the property sold, and reserve amounts. The conditions of sale are a part of the bidder’s package and are agreed to by the bidders prior to the start of the auction.

consignment auction

– a type of auction where sellers can add their listings to the original list of properties established by the auctioneer. An auctioneer may do this to include multi-parcel properties as the seller retains the right to approve the final bid. One of the advantages to this type of auction is that the marketing expenses are shared equally by the sellers, resulting in a savings to the seller.

Contract

– a legal agreement in which two or more people or legal entities that either begins a new business relationship or modify an existing one

cooperating broker

– a real estate broker who agrees to terms with a buyer that the broker will only receive a commission on the sale of a property if the buyer is registered, is the high bidder on the property, and closes on the property.

D – E

dual agency

– a legal term where a person represents both the buyer and the seller (who are opposing interests) of a property. Auctioneers always represent the seller and never act as a dual agent.

due diligence

– the process whereby all the information about a property is collected and organized. The information must be vital and include the legal status of the property and its condition.

due diligence packet

– see bidder package

estate sale

– a type of sale that takes place as the result of the death of the property owner. This sale can include personal property as well as real property.

G – H - I - L

groundsmen/groundsperson(s)

– See bid assistants

hammer price

– the last bid on the property just before the auctioneer drops their hammer or gavel, formally closing the bidding process. The final price will be publicly announced by the auctioneer immediately before dropping the hammer.

“In Its Present Condition”

– see “As Is”

Internet auction

– a type of auction that is conducted over the Internet. The auction takes place at a set time, and there is no live auctioneer or live bidders present. (see also - live Internet auction)

Letter of Credit

– see bank Letter of Credit

 

listing agreement

– See auction listing agreement

listing broker

– a person who is a licensed real estate agent and legally acts on behalf of a property owner to sell their property. This agreement is secured by a contract.

live Internet auction

– this type of auction takes place at a physical location, where bidders and the auctioneer are present and bidding is conducted over the Internet. (see also - Internet auction)


 Real Estate Auction Glossary [ M -Z ]