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AARE
The professional designation awarded by the Auction Marketing Institute, Inc., 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 practice in the bidding process without being physically present. Generally, a bidder submits an offer on an item prior to the auction. Absentee bids are usually handled under an established set of guidelines by the auctioneer or his representative. The particular rules and procedures of absentee bids are unique to each auction company.

Absentee Bidder
A person (or entity) who does not attend the sale but submits, in advance, a written or oral bid that is the top price he or she will pay for a given property.

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.

Addendum
An addition to a contract that is usually written at a later date signed by all parties.

Administrator
A male person appointed by the probate court to handle an estate – usually with no authority to sell real estate.

Administratrix
A female person appointed by the probate court to handle an estate – usually with no authority to sell real estate.

Advertising
Non-personal, paid communication such as newspaper, radio, direct mail and TV directed toward the general public or, in some cases, specific prospective client groups to provide information about the time, place, contents, and arrangements of an auction.

Advertising Plat
A typically rough draft drawing of the property or tracts used in Preliminary Marketing of property prior to completion of a final plat.

Agent

A person who acts for or in the place of another individual or entity by authority from them.

Agricultural
Any information relating to farming practices, uses, or rural living (not involving residential, commercial or industrial zoning).

Appraisal
The act or process of estimating value.

Apprentice Auctioneer
An auctioneer who is in training, operating under the supervision of a licensed or experienced auctioneer.

As Is And Where Is
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.”

Assignment
A legal document or act, where one party to a transaction moves or delivers his interest in the transaction to another – (assignment of a contract).

Attorney Fees
Any monetary charges from lawyers in regards to the real estate transaction.

Auction
A method of selling real estate in a public forum through open and competitive bidding. Also referred to as: public auction, auction sale or sale.

Auction Contract
A listing document that grants to the auctioneer the exclusive right to sell the property.

Auction Listing Agreement
A contract executed by the auctioneer and the seller which authorizes the auctioneer to conduct the auction and sets out the terms of the agreement and the rights and responsibilities of each property.

Auction Marketing
The method of marketing real or chattel property utilizing the auction method of sale.

Auction with Reserve

An auction in which the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time.

Auctioneer
The person whom the seller engages to direct, conduct, or be responsible for a sale by auction. This person may or may not actually call or cry the auction.

Auctioneer’s Plat
Usually, a survey or drawing used by the auctioneer in marketing the property (that may not be the final plat).

 

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Bank Letter of Credit

A letter from a bank certifying that a named person is worthy of a given level of credit. Often requested from prospective bidders or buyers who are not paying with currency at auctions.

 

Bankruptcy Auction
An auction being held under the direction and with permission of the Federal Bankruptcy Court.

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.

Bid Caller
The person who actually “calls”, “cries” or “auctions” the property at an auction, recognizing bidders and acknowledging the highest bidder. Commonly known as the auctioneer.

Bid Rigging
The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value.

Bid Price
The amount of money that a prospective buyer enters during the auction as his or her offer to purchase.

Bidder Number
The number issued to each person who registers at an auction.

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

Bidders
Interested parties who offer amounts of money for properties or pieces of chattel during an actual auction situation.

Bidding Paddle
A paddle-shaped device with a number printed on it that is the bidding number assigned to the potential bidder when he or she registered for the auction. The participant bids by raising the paddle.

Binding and Obligatory
A phrase that means the parties are tied to the agreement by contractual language.

Bona Fide
The term “bona fide” means that a person or agency is acting “in good faith, without dishonesty, fraud or deceit”. In relation to an auction, the term is normally used to refer to bona fide purchaser.

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
A person that is a purchaser of real or chattel property.

Buyer’s Broker
A real estate broker who represents the buyer and, as the agent of the buyer, is normally paid for his/her services by the buyer.

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.

 

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Cashier
The employee of the principal auctioneer or auction marketing firm who, working from the auction clerk’s records, collects all the proceeds from an auction, disperses the receipts and submits a complete report of the auction to the seller.

Catalog or Brochure
A publication advertising and describing the property(ies) available for sale at public auction, often including photographs, property descriptions, and the terms and conditions of the sale.

Chattel Property
Any goods or services that are not real estate, to be sold auction (personal property, machinery, bank notes, etc.).

Clean-up
Any service that will make the property more marketable by sweeping, washing, mowing, hauling off trash, bulldozing debris, or in improving the cosmetic appearance in any way.

Clear Title
A term used in both real estate and chattel property auctions that states that there are no liens or encumbrances against the property to be sold.

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

Closing
The completion of a transaction where the purchase price is paid to the seller (less fees) and the buyer receives title to his or her real or chattel property purchased.

Closing Attorney
The lawyer that handles the act of closing, paying funds from escrow, and settling with the seller and buyer.

Closing Date
The day that is set out in the auction contract to complete the transaction between both the seller and the buyer.

Commission
The fee charged to the seller by the auctioneer for providing services, usually a percentage of the gross selling price of the property established by contract (the listing agreement) prior to the auction.

Conditions of Sale
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 advertisement or announced by the auctioneer prior to the start of the auction.

Contract
An agreement between two or more persons or entities which creates or modifies a legal relationship.

Cooperating Broker
A real estate broker who registers a prospective buyer with the auction company, in accordance with the terms and conditions for that auction. The broker is paid a commission only if his prospect is the high bidder and successfully closes on the property. Also known as a participating broker.

Creditor
The individual, bank, or corporation carrying the financing on the property to be sold at the auction.

Critical Path
Sequence of key tasks to be done by auction contractor or other designated parties on specified dates, leading to desired goals.

 

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Deed
An instrument by which real property is passed from one party to another party. Five kinds of deeds include General Warranty Deed, Special Warranty Deed, Trustees Deed, Master Commissioners Deed, and Quit Claim Deed.

Deposit
The sum of money paid by the bidder for the privilege of bidding or as a percentage of the purchase price, especially on large-dollar property. Used to discourage casual or unqualified bidders.

Down Payment
The amount of earnest money put up by a purchaser to contractually bind the seller to sell at a certain price and terms.

Driveway Easements
Any right of another party (that does not own the land the driveway is on) to use said driveway for their use without permission of the owner.

Dual Agency
The representation of opposing principals (buyers and seller) at the same time.

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

 

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Earnest Money Deposit
The down payment made with the auction purchase contract at its signing, pending the final closing.

Eminent Domain (condemnation)
The power of eminent domain is the federal, state and local government’s right to take property for adequate compensation and to use it for the public good. Land may be taken to build schools, parking lots, highways, parks and urban renewal developments or to allow electric power companies, natural gas companies, telephone companies and railroads to conduct their business.

Escrow Account
A separate account held by a broker or auctioneer to keep sellers and buyers money in, awaiting the final closing.

Estate

All of the assets owned by a given party in the death of a person or the assets of a person in the filing of a bankruptcy petition.

Estate Sale
The sale of property left by a person at his or her death. An estate auction can involve the sale of personal and/or real property.

Estimate
An opinion-not an appraisal-of what price a property will bring at auction, based on past sales of similar properties at recent auctions.

Executor
A man named in a will to handle a deceased person’s estate.

Executrix
A woman named in a will to handle a deceased person’s estate.

Exhibit
A document that is pertinent to a contract being a part of the terms and conditions, and usually attaches to a contract.

Exhibition
The showing of property prior to its presentation at auction; arranged by the auctioneer and/or owner to allow prospective bidders to inspect and evaluate the property.

Expenses
The fees for services and supplies that come out of an auction sale to get to the net commission. Gross commission – expenses = net commission, or sellers net proceeds.

Expressed or Implied
To mean without saying; to insinuate.

 

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Fee simple Estate
An estate held in fee simple is the highest type of ownership of real estate recognized by law. It is complete ownership for all time.

Final Gross Bid
The total transaction price offered by the last and final prospective purchaser.

Final Plat
The surveyors drawing that will be recorded for making the deed transfers.

 

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 General Sale

An auction that includes various types of property-household goods, antiques, farm equipment, autos etc.

General Warranty Deed
A written instrument that transfers title to real estate from one person to another, guaranteeing that the title is clear.

Guarantees
The warranty that comes with a clear title, and any other items pertinent to the contract.

 

-H-

Hammer Price
Price established by the last bidder and acknowledged by the auctioneer before dropping the hammer or gavel.

Heirs
The persons that will inherit that of another at death.

High 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.

 

-I-

Indemnify
To hold another person harmless, to guarantee another no risk for their actions.

Ingress & Egress Easements
The right of a person that does not own the property come and go at will over a specified area.

 

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-L-

Lead Base Paint Disclosure
To advise a prospective purchaser that the property in the proposed transaction may contain painted areas containing lead.

Lien
A security agreement that attaches to real or personal property to secure collateral for a loan.

Listing Agreement
See “Auction Listing Agreement”

Listing Broker
A real estate broker who has a listing on a property and cooperates with the auction company by allowing the auction agreement to supersede his/her listing agreement.

 

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Market Value
The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Minimum Bid Auction
An auction in which the auctioneer will accept bids at or above a disclosed price. The minimum price is always stated in the brochure and advertisements and is announced at the auctions.

Minimum Opening Bid
The lowest acceptable amount at which the bidding must commence.

Mortgage
A lien or security agreement that attaches to real or personal property to secure a note for a loan.

Multi-Property Auction
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-Seller Auction
Properties owned by many sellers, offered through a common promotional campaign are auctioned in a single event.

 

-N-

National Auctioneers Association
An association of individual auctioneers united to promote the mutual interests of its members; formulate and maintain ethical standards for the auction profession; promote the enactment of just and reasonable laws, ordinance and regulations affecting auction selling; make public more aware of the advantage of auction selling; and generally improve the business conditions affecting the auction profession.

Net Proceeds
The amount of money paid to a seller after all fees for the auction sale have been deducted.

 

-O-

Obligatory
The act of being bound legally, compulsory, or mandatory.

Opening Bid
The first bid offered by a bidder at an auction.

On-site Auction
An auction conducted on the premises of the property being sold.

 

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Personal Note
A promissory note signed by the debtor to pay off a loan.

Personal Property List
A detailed list of chattel property to be offered for sale at the auction.

Plat
A surveyor’s drawing of real estate, to be sold at the auction.

Point of Sale
The location where the auction will take place and where signs are placed to advertise the auction.

Possession
The time which a seller transfers the property to the buyer (gives up the keys and hands over actual occupancy).

Power of Attorney
A written legal instrument that allows a person to act legally on behalf of another.

Proposal
A written document submitted to a prospective seller that outlines the chronological chain of events that would occur in an auction marketing proposal.

Pro-rated Taxes
The seller pays the taxes up to the date of the deed and the buyer pays after the date.

Purchase Price
The amount that the total transaction price for the property amounted to.

 

-Q-

Quantity Options
A lot including two or more items is sold on a per-unit basis. After the price is established, the successful bidder (the buyer) may take whatever quantity he or she wishes at that price.

 

-R-

Referring Broker
A real estate broker who does not have a listing on a property, but refers the auction company to a potential seller for an auction. Usually earns a flat fee commission for referring product to an auction company.

Resale Number
A number issued to dealers who buy merchandise at auction to resell; holders of resale numbers are exempt from paying sales tax on such purchases at auction.

Reserve
The minimum price that a seller is willing to accept for a property to be sold at auction. Also known as the reserve price.

Restrictions
A written legal document that sets out certain guidelines that a property can be used for and buildings that can be built there on.

Roadway Easement
The right of another party to use property they do not own, for ingress and egress over a specified area.

 

-S-

Sale Cost
The expenses paid by the seller for services and supplies related to the auction. Usually includes advertising, photography, insurance and transportation.

Sales & Purchase Contract
The written agreement that the seller and buyer sign to bind their agreement to sell the subject property to the buyer.

Sales Tax
The state or local tax based on a percentage of the purchase price. Dealers who hold resale numbers usually are exempt from sales tax.

Seller
Entity that has legal possession, (ownership) of any interests, benefits or rights inherent to the real or personal property.

Street & Public Utility Easements
All rights of another to use property that they do not own for specific purposes such as roadways, telephones lines, electric lines, and sewers.

Survey
The act of making linear and angular measurements around a tract of real property in order to produce a certified drawing of the property.

 

-T-

Tax Sale
Public sale of property at auction by governmental authority, due to nonpayment of property taxes.

Taxes
The fees paid to a governmental authority, (based on the assessed value of the property) that are required of persons for the support of a government.

Terms
The period of time that an agreement is in effect.

Terms & Conditions
The printed rules of the auction and certain aspects of the Purchase & Sale Agreement that are read and/or distributed to potential bidders prior to an auction sale.

Title Attorney
The lawyer that did the search at the County Court Clerk’s Office (in the county which the property is located) to check for any liens or encumbrances that may be on the property.

Title
The coincidence of all the elements that constitute the fullest legal right to control and dispose of property.

Title Insurance Company
A company that will guarantee or indemnify the purchaser of a piece of real property against any encumbrances or defects in the chain of owners for a specific number of years.

Title Search
A complete and accurate report of any liens or encumbrances that would have an affect on the soundness of a particular piece of property.

Tract
A parcel of land of any size.

Trustee’s Deed
A legal instrument, in the case from an officer of the Federal Bankruptcy Court, That transfers the property of a debtor free and clear of all liens and encumbrances.

Trustee’s Sale
A sale at auction by a trustee (usually ordered by the Federal Bankruptcy Court).

 

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Utility Easements
The right of a person or corporation to use anothers land for the purpose of construction and maintaining telephone lines, cable T.V. lines, sewers and public electricity, etc.

-W-

Warranties
Guarantees made by the seller of a property about the property.

Withdrawal
Failure to reach the reserve price or insufficient bidding.

-Z-

Zoning
The Governmental authority or act there of, that regulates the uses of all properties in a county.