Glossary of Auction Terms
Understanding auction terminology can help you navigate the auction process more effectively. Here’s a comprehensive glossary of common auction terms:
1. Absolute Auction
A type of auction where the property is sold to the highest bidder regardless of price. There is no reserve price, and the property will sell no matter what.
2. Bid
An offer made by a bidder to purchase the property at a certain price. Bids are typically made in incremental amounts during the auction.
3. Bidder
An individual or entity that participates in the auction by placing bids to purchase the property.
4. Bidder’s Premium
A percentage of the final bid price that is added to the winning bid and paid by the buyer. This fee is typically used to cover auctioneer fees and other costs.
5. Reserve Price
The minimum price that a seller is willing to accept for the property. If bidding does not reach this amount, the property may not be sold.
6. Starting Bid
The initial bid amount set by the auctioneer to begin the bidding process. This amount is usually lower than the reserve price to encourage bidding.
7. Catalog
A document or online listing that provides detailed information about the properties being auctioned, including descriptions, photos, and terms of sale.
8. Hammer Price
The final bid amount accepted by the auctioneer before the gavel (or “hammer”) falls, indicating that the property has been sold to the highest bidder.
9. Escrow
A financial arrangement where a third party holds and manages the funds related to the property transaction until all conditions are met and the sale is finalized.
10. Lot
An individual item or property that is offered for sale in an auction. Each lot is typically auctioned separately.
11. Open House
A scheduled viewing period prior to the auction where potential buyers can inspect the property and assess its condition.
12. Proxy Bid
A bid placed on behalf of a buyer who is not present at the auction. A representative or an automated system may place bids up to a specified limit.
13. Reserve Auction
An auction where the property is sold only if bidding meets or exceeds a predetermined reserve price set by the seller.
14. No Reserve Auction
An auction where the property is sold to the highest bidder regardless of the bid amount, with no minimum reserve price.
15. Contract of Sale
A legally binding document outlining the terms and conditions of the sale, including the purchase price, deposit, and closing date.
16. Closing
The final stage of the auction process where the sale is formally completed, and ownership of the property is transferred from the seller to the buyer.
17. Bidder’s Deposit
A sum of money required from bidders before they can participate in the auction. This deposit ensures that bidders are serious and can cover potential winning bids.
18. Auctioneer
The individual responsible for conducting the auction, managing the bidding process, and calling out bids.
19. Conditions of Sale
The rules and terms under which the property is auctioned, including payment terms, deposit requirements, and any special conditions.
20. Reserve Fee
A fee charged by the auction house for setting a reserve price on the property. This fee is separate from the commission and other costs.
21. Commission
A fee paid to the auction house or auctioneer based on a percentage of the final sale price. This fee covers the cost of conducting the auction.
22. Terms of Sale
The specific terms and conditions that govern the auction, including payment deadlines, financing arrangements, and any additional requirements.
23. Withdrawal
The act of removing a property from the auction before it is sold. This may occur if the reserve price is not met or if the seller decides not to proceed with the sale.
24. Bid Increment
The minimum amount by which each new bid must exceed the previous bid. This increment is set by the auctioneer and ensures orderly bidding.
25. Title Search
An investigation into the legal ownership of the property, including any existing liens, encumbrances, or claims. This ensures that the seller has the right to transfer ownership to the buyer.
26. Pre-Auction Offer
An offer made by a buyer before the auction begins. If accepted, this offer can result in the property being sold prior to the auction date.
27. Gavel
The auctioneer’s mallet used to signal the end of bidding and indicate that the property has been sold to the highest bidder.
28. Reserve Price
The minimum price the seller is willing to accept. If bidding does not reach this price, the property may not be sold.
29. Seller’s Disclosure
A document provided by the seller outlining the condition of the property, including any known issues or defects. This helps buyers make informed decisions.
Understanding these terms can enhance your auction experience and help you navigate the process with confidence. If you have any questions or need further clarification, feel free to reach out to us at Oliver Auctions.
