Important Auction Terms You Need to KnowBy Angela Smith, Communications Manager
November 22, 2019
If the auction method is for you, here are 10 terms we think you should know...
If you’re thinking of selling your home, ranch, farm or other real estate or personal property, it’s important you know all of your options. Many people are turning to the auction method to sell their property in order to get maximum yields in the shortest amount of time. If the auction method is for you, here are 10 terms we think you should know:
- Absolute auction – An auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve.
- Auctioneer –The agent of the seller who, for a fee, conducts the auction, recognizing the bidders and acknowledging the highest bidder, who becomes the buyer. In many states and communities, auctioneers must be licensed and bonded.
- Bid - A prospective buyer's indication or offer of a price he or she will pay to purchase property at auction. Bids are usually in standardized increments established by the auctioneer
- Buyer’s Premium– An advertised percentage of the high bid or flat fee added to the high bid to determine the total contract price to be paid by the buyer.
- Multi-property auction – An auction event in which a group of properties offered through a common promotional campaign. The properties to be auctioned may be owned by one seller or multiple sellers.
- Multi-parcel auction (“MultiPar”) – An auction method used when a property can be purchased in parts (eg: tracts or units) or as a whole. Bidding is offered on each part, combinations of parts, and the whole property. Bidders have the ultimate flexibility in what they want to buy as the auction concludes only when bidding subsides on all possible combinations. Whichever combinations produced the highest bid (or group of bids) will be the way the property is declared sold.
- Property Information Package (PIP) – The package of information and instructions pertaining to the property to be sold at an auction obtained by prospective bidders at an auction. Sometimes called a bidder packet or due diligence package.
- Reserve Auction –The minimum price that a seller is willing to accept for a property sold at auction. Usually not disclosed. If the high bid falls above the reserve, the auctioneer has the authority to declare the property sold. If the high bid falls below the reserve, the seller reserves the right to accept or reject it.
- Ringmen - Individuals who are positioned throughout the attendees at the auction to assist the auctioneer, spot bidders and assist prospective bidders with information to help them in their buying decision. Also known as bid assistants, bid consultants, bid spotters, or groundsmen
- Terms & Conditions – The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer's premiums, possession, reserves and any other limiting factors of an auction. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction.