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Auction Terminology

AARE (Accredited Auctioneer, Real Estate)
The professional designation awarded by the National Auctioneers Association Education Institute to qualified real estate auctioneers who meet the educational and experiential requirements of the Institute and who adhere to a strict code of ethics and standards of practice.

Absentee Bid
A procedure which allows a bidder to participate in the bidding process without being physically present. A bidder submits an offer prior to the auction.

Absolute Auction
The property sells to the highest bidder regardless of price. This typically generates a much greater interest among potential buyers resulting in greater attendance at the auction , and a higher final sale price for the item in question.

The act or process of estimating value.

Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as "As Is, Where Is" and "In its Present Condition.

A method of selling an item in a public forum through open and competitive bidding.

The person whom the seller engages to direct, conduct, or be responsible for a sale by auction.

Bank Letter of Credit/Guarantee
A letter from a bank certifying that a named person is worthy of a given level of credit.  Most often this is required when paying with none certified funds.

A prospective buyer’s indication or offer of a price he or she will pay to purchase an item at auction. Bids are usually in standardized increments established by the auctioneer.

Bid Assistant
A person who assists the bidder and the auctioneer. Calls out bidders’ bids, answers questions, and makes the bidder’s comfortable with the auction process

Bidder Number
Individually numbered card with your unique bidder number. This will identify you to the auctioneer as the successful bidder.

Bidder Registration
The process of registering your identity and ability to pay for successful bids. This is essential before bidding.

Bidder’s Choice
A method of sale whereby the successful high bidder wins the right to choose a property or properties from a grouping of similar or like-kind properties. After the high bidder’s selection, the property is deleted from the group, and the second round of bidding commences, with the high bidder in round two choosing a property, which is then deleted from the group and so on, until all properties are sold.

Broker Participation
An arrangement for third-party brokers to register potential bidders for properties being sold at auction for a commission paid by the owner of the property or the auction firm.

Buyer’s Premium
An amount (usually a percentage) that is added to the winning bid (hammer price) to determine the contract selling price which the buyer pays for the property being sold. The use of the buyer’s premium is so effective because it benefits both the buyers and the sellers.  Sellers benefit because it helps to defray many of the expenses associated with conducting an auction.  The buyer benefits because without the use of this tool, there may not have been an auction. The open and competitive bidding process might not exist if the buyer’s premium were not used to offset some of the auction related expenses.


These auction professionals have completed extensive and intensive auction leadership training at the Certified Auctioneers Institute (CAI) and have enhanced business and leadership skills. CAI auction professionals have completed three years of classroom, individual, and group work applied to their auction professional roles and business. Less than 850 professionals currently hold this designation.

When selling choice, the auctioneer is offering more than one item up for auction at a time. The winning bidder then has the choice to take one item or multiple items.  If the bidder wishes to take more than one item, the bid price will be multiplied by the amount of items the bidder chooses.

The person employed by the principal auctioneer or auction firm to record what is sold and to whom and for what price.

Conditions of Sale
The legal terms that govern the conduct of an auction, including methods of payment, terms, buyers premiums, possession, reserves and any other announced by the auctioneer prior to the start of the auction.

The person or authorized agent or entity that consigns goods to an auctioneer. The consignor is usually the seller.

Due Diligence
The process of gathering information about the condition and legal status of assets to be sold.

Hammer Price
The highest bid which is accepted by the auctioneer

Multiple Property Auction
When selling choice, the auctioneer is offering more than one item up for auction at a time.  The winning bidder then has the choice to take one item or multiple items.  If the bidder wishes to take more than one item, the bid price will be multiplied by the amount of items the bidder chooses.

Online Bidding
The procedure of submitting bids electronically by a mobile device or computer.

On-Site Auction
An auction conducted on the premises of the property or items being sold.

Personal Property
All goods and interests other than real property including chattels and commodities. Title for personal property sold at auction passes when the auctioneer accepts the final bid and announces the item sold (at the fall of the hammer).

Property Information Packet (PIP)

The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at an auction or from our website. Sometimes called a bidder packet or due diligence package.

Property Tour (Preview)
Specified date and time property is available for prospective buyer viewing and inspection. Also known as Open House or Inspection.

Real Property/Real Estate
Land and all interests therein, including all improvements to the land, such as buildings, fences, and fixtures. Title for real estate sold at auction passes at closing with delivery and acceptance of the deed.

Reserve Auction
The seller establishes a confidential reserve price and has the right to accept or decline the highest bid if it falls below the established reserve.  If the reserve auction method is chosen, it is imperative that the reserve price be realistic.

Sealed Bid Auctions
Each bidder submits a single, irrevocable bid without knowledge of the other bids. When the bidding period is closed, the bids are opened simultaneously, and the winner is the highest bidder.