About Auctions

What is an auction?

• Auctions occur when consumers gather to bid against each other physically, or online, to buy an item until the highest offered price is reached. Auctions have existed for more than 2,000 years and become more popular every year.
• An auction is the perfect place to sell prized possessions or if you’re looking for one-of-a-kind treasures.
• Although some say it is complicated and time consuming, fast-paced auctions are one of the most efficient ways of turning your property or assets into immediate cash. You could have enthusiastic, attentive buyers, aggressively competing to purchase your property with the help of pre-sale marketing and the attention-getting chant of the auctioneer.
• Auctions are exciting and fun! If you’ve never attended an auction, you’re really missing out on a great time! Auctions exhilarate and captivate everyone, from the opening call of “Would you bid?” to the sound of the gavel slamming down and the ringing of “Sold!”
• Auctions bring out the competitive nature in all of us, so there’s always potential buyers that want to successfully bid against others who want the same thing! Everywhere you turn at an auction, there’s a thrill in the air.

The History of Auctions

Ancient Greek records have documented auctions occurring as far back as 500 B.C. During this time, women were auctioned off as wives. In Rome, around the time of Christ, auctions were popular for family estates and the selling of war plunder. In 193 A.D., the Praetorian Guard put the Roman Empire up on the auction block, which was one of the most significant historical auctions that occurred.

American auctions date back to the 1600s, when the Pilgrims’ arrived on America’s eastern shores and continued to be popular during colonization with the sale of crops, imports, livestock, tools, slaves and entire farms. During the American Civil War, Colonels were the only people allowed to auction war plunder. Today, many auctioneers carry the title of “Colonel.” Auction schools started in the early 1900s in the United States. Many businesses and individuals needed to liquidate their assets because of the economy, so the Great Depression created many opportunities for the auctioneers.

As time goes by, auctions are becoming more and more popular as a means to sell goods and assets. The use of computers, cell phones and fax machines have changed the face of auctions, keeping the auctioneer from having to stand before an audience and call an auction.

Common Phrases Used at Auctions

• Absentee Bid - A procedure which allows a bidder to participate 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 their representative. The particular rules and procedures of absentee bids are unique to each auction company.
• Absolute Auction (Auction without Reserve) - An auction where the property is sold to the highest qualified bidder with no limiting conditions or amount.
• “As 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”.
• 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 party.
• Auction with Reserve (Subject to Seller Confirmation) - 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.
• Ballroom Auction - An auction of one or more properties conducted in a meeting room facility.
• 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.
• 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.
• Buyer’s Premium - A percentage added on to the high bid. Buyer premiums are used by many auction houses as a way of spreading the cost of the event with the people who benefit most from the opportunity to purchase; the buyer. It is an amount added to the high bid in addition to the high bid and payable by the buyer.
• Caveat Emptor - Latin term meaning “let the buyer beware.” A legal maxim stating that the buyer takes the risk regarding quality or condition of the property purchased, unless protected by warranty.
• 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.
• Opening Bid - The lowest acceptable amount at which the bidding must commence.
• Terms and Conditions - “Terms and Conditions” are the printed rules and format of the auction. Terms and conditions outline the type of auction, the commission structure of auction, and any other pertinent information. The terms of each auction vary and differ between auction companies.
• Ringman - The “ringman” is a member of the auction team who works with bidders throughout the auction. A “ringman” is generally recognized as the person in the crowd yelling and flashing hand signals to the auctioneer when a bid has been made. This individual works the auction “ring,” hence the name “ringman.”
• Withdrawal - Failure to reach the reserve price or insufficient bidding.

Auction Tips

Before You Bid