GLOSSARY OF AUCTION TERMS
Your complete A-Z of Auction House and Bidding terms
AARE – Initials found after some auctioneers names that mean “Accredited Auctioneer of Real Estate.” A designation an auctioneer can earn by meeting certain educational and experience requirements, as defined by the Auction Marketing Institute.
Absentee Bid – A bid on a specific lot left in advance of the auction with someone (often the auctioneer) by a bidder who will not attend.
Absolute Auction – See “auction without reserve.”
Accounting – An auctioneer’s financial report to the seller detailing all sales, all money received, and all money disbursed.
Agent – A person authorised by a principal to act for him within a scope of authority granted, and to bind the principal accordingly. An auctioneer is an agent of a seller.
Apprentice – A few states require those who would become licensed auctioneers to serve an apprenticeship for a specified period under a licensed auctioneer.
A Rock – Every auctioneer’s favourite – a bidder who won’t quit.
As Is – The first two words taught to new students in auction school. It means selling assets without any warranty as to their condition and merchantability for a particular use.
Auction – The sale of property by means of exchanges between an auctioneer and bidders whereby the auctioneer declares a sale to the highest, or most favourable bidder, to form a contract of sale between that bidder and the seller.
Auction Fever – The rush of competitive excitement that seizes some bidders during the bidding process.
Auction Subject to Seller Confirmation – This is a variation on an “auction with reserve.” The auctioneer brings the top bid to the seller who then accepts or rejects it.
Auction with Reserve – The seller reserves the right to accept or reject any and all bids, or to withdraw the property at any time prior to the announcement of the completion of the sale. See also “reserve price.”
Auction without Reserve – The property will be sold to the highest bidder regardless of price and with no contingencies. The seller may not bid, and the auctioneer may not refuse to accept a bid. Commonly called an “absolute auction.”
Auctioneer – The person engaged by the seller to conduct the auction.
Bank Letter of Credit – An auctioneer may require an unknown person to provide a letter from his bank certifying creditworthiness to a stated level before he will be registered to bid at the auction.
Bid – The amount a prospective buyer signals the auctioneer he would pay to buy the lot during bidding.
Bidder – One who places a bid.
Bid Assistant – Auction worker who assists the auctioneer by providing prospective bidders with information about the lots, and also spots bidders. Commonly referred to as a ring man, bid spotter, or ground man.
Bid Caller – The person who conducts the bidding process, usually the auctioneer. However, auctioneers sometimes engage others to call bids and these bid callers do not have primary responsibility for the auctions.
Bid Card – A card exhibiting a registered bidder’s bid number to be used for bidding in the auction. Also called a bidder’s paddle, as they are sometimes wooden pieces resembling ping-pong paddles.
Bid off the Wall (ceiling, fence post, etc.) – See “phantom bid.”
Bid Package – A compilation of materials, information, and terms relevant to the auction and the lots to be sold that is given to each bidder upon registration.
Bid Rigging – When two or more people conspire to restrain trade by artificially “fixing” bids in an auction. This can occur when bidders agree not to bid against one another so as to depress selling prices, or when an auctioneer and one or more shills work in concert to artificially increase selling prices.
Bidders’ Dispute – A term commonly (and mistakenly) used with “late bids.”
Bid Spotter – See “bid assistant.”
Block – While it can be a podium or raised platform, it’s any point from which the auctioneer cries the bids. Lots come to the block to be offered for sale.
Bonded – Some states that license auctioneers require them to purchase surety bonds to protect those who deal with them. These bonds are typically small in amount.
Book an Auction – When an auctioneer enters into a contract with a seller to sell property at auction.
Bottom Feeder – A bidder who will buy only for “fire sale” prices.
Bouncing a Bid – See “phantom bid.”
Bump – See “phantom bid.”
Buyer’s Premium – The third and fourth words taught to new students in auction school. A marketing tool increasingly used by auctioneers, it’s a surcharge that is a stated percentage added to the high bid for a lot to determine the lot’s final selling price to be paid by the buyer.
Buy-Back – When an auctioneer or seller bids on a lot and “buys” it back to protect it against a sacrifice to the highest bidder whose bid is insufficient in the view of the auctioneer or seller. Unless a seller reserves the liberty to bid and announces it, this is both fraud and a violation of the UCC.
Buy-In – See “buy-back.”
By-bidder – See “shill.”
CAGA – Initials found after some auctioneers” names that mean “Certified Appraisers Guild of America.” A designation an auctioneer can earn by meeting certain educational and experience requirements, as defined by the Missouri Auction School.
CAI – Initials found after some auctioneers’ names that mean “Certified Auctioneers Institute.” A designation an auctioneer can earn by meeting certain educational and experience requirements, as defined by the Auction Marketing Institute.
Caveat Emptor – The two most important words for prospective buyers. It is an ancient Latin axiom that means, “Let the buyer beware.” It reminds buyers that they take the risk of the quality and condition of the property they purchase.
Chant – The rhythmic combination of numbers and separating filler words called by the bid caller on a lot. The chant is comprised of two numbers – the amount that has been bid for the lot, and the next higher increment that the bid caller is seeking in the bidding. The single-most important characteristic of a good chant is clarity.
Choice – A selling method auctioneers sometimes use with similar items that are offered in a “variable” lot. Bidders compete and the highest bidder gains control. That bidder has the “choice” to select any one piece from the lot for the amount of his high bid, as well as the “choice” to select additional pieces from the lot, again paying the amount of his high bid for each additional piece taken. After this bidder has completed his selection, if any items remain in the lot, one or more additional rounds of bidding will follow the same procedure until all items in the lot have been sold.
Clerk – An auction worker who records each lot sold and marks the identity of the seller, buyer, and amount of the selling price.
Collusion – See “bid rigging.”
Commission – The fee the auctioneer charges a seller for providing certain services to sell property at auction. The commission is usually a stated percentage of the gross selling price of the property.
Consignment auction – An auction comprised of goods offered for sale by multiple sellers.
Consignor – A seller who places goods with another for sale, such as with an auctioneer.
Contract – “A promissory agreement between two or more persons that creates, modifies, or destroys a legal relation.” – Black’s Law Dictionary.
Crooks – Auctioneers, bidders, and buyers who use unethical and illegal practices.
Cry the Auction – The bid caller’s chant in conducting bidding.
Disclosure – The best insulator against liability an auctioneer can have. Auctioneers should disclose whatever information they possess that sellers and bidders need to make informed and intelligent financial decisions regarding the auction.
Due Diligence – The process of investigating and gathering information necessary to make an informed and intelligent decision about an important matter, such as a prospective buyer examining the authenticity, condition, quality, and status of property to be sold.
Estate – A person’s property, both real (i.e. real estate) and personal. One’s property is his estate whether the person is alive or dead.
Ethical – The number one characteristic of the best auctioneers.
Fake – A worthless imitation passed off as genuine and valuable. The sale of fake items in auctions is a significant problem and it’s fraud.
Fence – A place (including an auction) where stolen goods are sold. Buyers can never receive good title to what they purchase if it has been stolen, so these places are to be avoided.
Filler Words – Words an auctioneer blends into his chant to break up the numbers called and give the chant a smooth, rhythmic quality: I’m bid 5 would he give 10 . . . .”
Fraud – The misrepresentation of a material fact that causes another to rely on the misrepresentation and be damaged. Fraud can be both criminal (penalty may be incarceration and/or a monetary fine) and civil (the damaged party can sue for money damages and/or to avoid a contract of sale). Civil fraud can be either actual (i.e. an intentional misrepresentation designed to trick and cheat) or constructive (i.e., an innocent, but false, representation that causes another to rely on it and be damaged). Fraud is the number one problem in auctions.
GPPA – Initials found after some auctioneers” names that mean “Graduate Personal Property Appraiser.” A designation an auctioneer can earn by meeting certain educational and experience requirements as defined by the Auction Marketing Institute.
Ground Man – See “bid assistant.”
Hammer Price – The selling price of a lot to the highest bidder.
Heat of the Auction – Auctioneers want to sell the best items in the “heat of the auction” when the bidding interest and money to be spent are the greatest.
House number – A bidder number used by the auctioneer to “buy in” lots. See “buy-back.”
House Packing – A fraudulent scam where an auctioneer brings in goods unrelated to the house where the auction is held and misrepresents them as belonging to the owner of the house or some notable person.
Introducer – At some auctions, a member of the auction crew (not the auctioneer) will describe each lot to the audience before it is opened to bidding.
Jump the Bid – A bidder strategy to knock out competition by bidding an amount higher than what the auctioneer is requesting.
Knocked Down – When the auctioneer sells a lot to the highest bidder, he “knocks it down” to that bidder.
Late Bid – A bid seen by the auctioneer after a lot has been sold. It is meaningless and ineffective to upset the contract of sale already formed.
Left Bid – See “absentee bid.”
License – About half the states have some form of license law for auctioneers. These laws vary from mere revenue acts, to more substantive requirements that include regulatory oversight.
Lot – A defined article or group of articles that is the subject of a separate sale. Each offering by the auctioneer is a lot.
Market Value – A nebulous term that refers to the highest price certain property will bring in an open, fair, and competitive selling environment. Markets can be defined as collectors’,retail, wholesale, and down to “fire sale.” Markets can also vary in size from worldwide, to national, to regional, to statewide, to local.
Marketing – A wide-ranging business activity that encompasses both merchandising and selling activities. Auctioneers refer to marketing as the advertising and promotional efforts they make to attract potential buyers to their auctions.
Minimum Opening Bid – An auction in which the auctioneer will only accept bids at, or above, the amount of the disclosed, opening bid.
Misrepresentation – See “fraud.”
NAA – National Auctioneers Association, and organisation of over 6,000 professional auctioneers headquartered in Overland Park, Kansas.
No-Sale Fee – A fee assessed a seller by an auctioneer for offering a reserved (price) lot when the lot does not sell.
On-Site Auction – An auction conducted on the premises where the property is located that is being offered for sale.
One Money – When two or more items are sold in a single lot for the highest amount bid.
Phantom Bid – A false bid called by an auctioneer for the purpose of tricking a legitimate bidder into bidding more than he would otherwise have to bid to purchase the lot. The auctioneer pretends to take a bid from a bidder who is nonexistent. Then he asks the legitimate bidder to increase his bid to gain control of the lot. This is fraud.
Picker – A person who searches for and acquires goods of value for the purpose of reselling them for profit through various channels, including auctions. Pickers are an important component in auction sales as they bring many of the items to market that auctioneers sell.
Pooling – See “bid rigging.”
Preview – A designated time period for prospective buyers to view and inspect the property to be offered for sale.
Public Auction – An auction that is advertised and open to the public to bid on the property offered for sale.
Puffer – See “shill.”
Reproduction – An exact or close imitation of an item, usually worth far less than the original. The sale of unannounced reproductions is a major problem in auctions, and it’s fraud.
Reserve – A predetermined, minimum threshold price a seller will accept to sell certain property at auction. It is a safeguard against a sacrifice of the seller’s assets. See “auction with reserve.”
Retraction – When a bidder withdraws a bid prior to the auctioneer declaring a sale. A bidder’s retraction revives no previous bid.
Ring Man – See “bid assistant.”
Rolling Back – When an auctioneer cries decreasing numbers in an effort to tempt a bidder to jump in and start the bidding on a lot.
Security Interest – “An interest in personal property or fixtures which secures payment or performance of an obligation . . . “. UCC section 1-201 (37). The property becomes “collateral” for a promise to repay a debt.
Set In Price – See “starting the bid.”
Shill – Co-conspirators of a crooked auctioneer who are planted in an auction crowd to bid but not buy. Shills make “empty” bids in an effort to cause legitimate bidders to bid against them and escalate the bidding. The use of shills is fraud.
Sold! – Music to an auctioneer’s ears.
Starting the Bid – When an auctioneer makes the opening bid to kick off the bidding.
Suckers – Buyers who don’t exercise caveat emptor.
Terms – The provisions for the auction announced at the beginning that will become the binding details of the contracts of sale formed between the seller and respective high bidders.
Tie Bid – A figment of some people’s imagination. A tie bid exists in an auction only if the auctioneer mistakenly takes the same bid from two different bidders and then declares a sale to one of them.
Times the Money – A selling method whereby an auctioneer sells multiple items in one lot under the term that the lot’s final price will be calculated by multiplying the highest bid by the number of items comprising the lot.
Two ways – A selling method auctioneers sometimes use with items that would naturally go together, such as the pieces to a dining room set. The items are exposed to bidding individually, with the highest bid for each piece “held” and the items not sold. Then the items are exposed to bidding in aggregate. Whichever approach yields the highest total price is the way the items will be sold.
UCC – The Uniform Commercial Code: A body of commercial law that applies to auctions and has been largely adopted into law by every state except Louisiana.
Warranty – A promise that a statement of fact is true.
While the Money’s Hot – See “heat of the auction.”
Withdrawal – When an auctioneer does not sell a lot because it failed to reach its reserve price.