What is an Auction?

Whether you’re an individual who is a novice at auctions or an investor who is familiar with the real estate auction process … you may have some questions about the auction experience and related terminology. Here we offer some answers to frequently asked questions in hopes of making you feel comfortable and confident at your next auction.

There are two types of auctions: In the Absolute Auction, the property is sold to the highest bidder regardless of price. The main advantage of an absolute auction is that it generates maximum response from the marketplace since the sale is guaranteed. The excitement and participation of the buyer is heightened. An Auction Subject to Confirmation (also known as a “reserve” auction) allows the seller to reserve the right to confirm the high bid at the conclusion of the sale. A minimum acceptable price may or may not be disclosed and the seller may accept or reject the high bid within a specified time, usually within 24 hours. Unless explicitly advertised as "absolute" and likewise disclosed in the Terms and Conditions, auctions are "reserve" auctions.

Auction Terminology

Q: What is a buyer's premium?
A: A buyer's premium is a percentage of the high bid that is added to the high bid to establish the total purchase price. For example, if the high bid is $100,000 and that particular auction is using a 10% buyer's premium, the buyer's premium would be $10,000 ($100,000 high bid multiplied by 10%) and the total purchase price would be $110,000. This methodology is common to the auction industry, but is not used in all regions or in all auctions. Refer to the Terms and Conditions of specific sales to see if the buyer's premium is applicable.

Q: What does it mean when property is sold in "As-Is, Where-Is" condition?
A: This means that the potential buyer is bidding on the property where it is and in whatever condition it is in at the time of the auction. There is no representation as to the working condition of property and no warranty or guarantee is provided or implied. Therefore, potential buyers need to do inspections prior to the auction so that they know the condition of the property on which they are bidding. Material defects known to the auctioneer prior to the auction will be disclosed. However, the auctioneer makes no representations, guarantees, or warranties as to the property.

Q: What happens if I come across some terminology I do not understand, if I need clarification on Terms and Conditions, or if I have other questions?
A: Please ask us! We want to do everything possible to make buying and selling at auction a comfortable experience that meets your needs and expectations. Each auction has a contact person identified on the web site and you can contact him or her for details. You may also Contact Us with any question about buying or selling at auction.

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