Common Auction Terms and Phrases
absolute auction — A property is sold to the highest bidder with no minimum, no reserves. This type of auction presents the greatest opportunities for the buyer.
as is, where is – Property is sold as it is and where it is.
auction with reserve – Minimum price a seller will accept for a property sold at auction. Sales “with reserve” are advertised or announced prior to the auction or to bidding.
auctioneer – A person the seller engages to direct, conduct, or be responsible for a sale by auction
bidder package – Package of information and instructions about the property to be sold at auction. Package is obtained by prospective bidders prior to auction day.
bid – Prospective buyer’s indication or offer of a price he or she will pay to purchase property at auction. Bids are usually in standard increments established by the auctioneer, such as $500, $1,000, $10,000 etc.
buyer’s agent – A real estate agent who is employed by and represents only the buyer in a real estate transaction, regardless of whether the commission is paid by the buyer or by the seller or through a commission split with the listing agent.
buyer’s premium – An additional charge, usually expressed in the form of a percentage of the high bid, to the purchaser of the property at auction.
earnest money – A small percentage of the listing price in the form of a cashier’s or certified check that is presented by a bidder when he or she registers on auction day. The earnest money will be credited towards the purchase price.
hammer price – Price established by the last bidder and acknowledged by the auctioneer before he or she “drops the hammer,” also known as the “knock-down price.”
listing (co-broker) agent/broker – An agent or broker who lists the property and splits a commission with an auctioneer. The broker handles many of the traditional real estate functions and shares the commission based on the amount of involvement and the relationship defined by the two parties.
market value – The price a property brings on auction day – what someone is willing to pay.
minimum bid (auction without reserve) – An auction with a base or minimum bid, set by the seller, under which no bids are accepted. The property is sold to the highest bidder over the minimum.
REO – Real estate owned properties or properties acquired by financial institutions through foreclosure. These properties are often sold by auction to reduce carrying costs.
participating agent/broker – An agent or broker who registers a buyer, who purchases property offered through auction, then earns a commission established by that auction firm.
real estate auction – An intense and accelerated real estate marketing process that involves public sale of property through open, competitive bidding.
real estate broker auction participation – An arrangement whereby a licensee is not connected with the auction firm, but produces a buyer and shares the commission with the auction firm.
referring agent/broker – A real estate agent or broker, who refers a seller to an auctioneer, then receives a referral fee established by that auctioneer.
ringman, groundman, bid assistant – People on auction staff who “work the crowd” for bids during the auction.
Market Price is the price someone is asking for a property when put up for sale.
Estimated Market Value is the value set by the County Assessor where the property is located.
True Market Value is the value set by an actual sale between a willing seller and willing buyer. (Taxes are based on the value paid in dollars).
Minnesota law requires that assessor’s Estimated Market Value (EMV) be within 10% of actual “True Market Value”, which is based on the sale of other comparable real estate sales in that county. State Agency: There is a state agency which has the obligation and power to enforce that. So, though it may be that Estimated Market Values, which are determined by the county assessor, (these figures are on the real estate tax statement for each parcel of real estate in that county) are not the result of another appraisal opinion, chances are very good that they do not diverge more than 10% up or down from what True Market Value would be, in fact.