Art Auctions - The Definitive Guide: Auction Industry Term Glossary

This glossary covers many of the key terms used in the auction industry, providing a solid foundation for understanding auction processes and terminology.

Auction Types

• 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.
• Auction with Reserve: An auction in which the seller or their 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.
• Live Auction: A live auction is a competitive bidding event where prospective buyers gather in person at a specified location to bid on items presented by an auctioneer. During this type of auction, the auctioneer calls out the starting bid for each item and encourages attendees to place their bids, often resulting in a dynamic and energetic atmosphere. The auctioneer facilitates the process by recognizing bidders and announcing the highest bid until no further bids are made, at which point the item is sold to the highest bidder.
• Online/Virtual Auction: An auction conducted entirely online, without a traditional live audience. These may include reserve items where auctioneers bid to protect the reserve price.
• On-site Auction: An auction conducted on the premises of the property being sold.
• Timed Auction: Often synonymous with online auctions, a timed auction has a fixed time when the auction closes.

Key Roles

• Auctioneer: The person engaged by the seller to direct, conduct, or be responsible for a sale by auction. This person may or may not actually call or cry the auction.
• Bid Caller: The person who actually "calls," "cries" or "auctions" the property at an auction, recognizing bidders and acknowledging the highest bidder. Often synonymous with the auctioneer.
• Clerk: The person responsible for recording what is sold, to whom, and for what price at an auction
• Bid Assistants: Persons positioned throughout the auction to help the auctioneer spot bidders and assist potential bidders with questions and information. Also known as ringmen.

Bidding Terms

• Bid: A prospective buyer's indication or offer of a price they will pay to purchase property at auction. Bids are usually in standardized increments established by the auctioneer.
• Absentee Bid: A bid submitted in advance by a person who cannot attend the auction in person
• Bidder Number: The number issued to each person who registers at an auction.
• Opening Bid: The first bid offered by a bidder at an auction.
• Hammer Price: The price established by the last bidder and acknowledged by the auctioneer before dropping the hammer or gavel.

Financial Terms

• Buyer's Premium: An additional percentage or flat fee added to the high bid to determine the total contract price to be paid by the buyer. This is the share that the auction house makes on each sale.
• Gross Merchandise Value (GMV): GMV represents the sum of the value of winning bids from an online auction marketplace. This is distinguished from THV in that THV includes in-person, online and absentee bids.
• Reserve Price: The minimum price that a seller is willing to accept for an item to be sold at auction. This amount is typically not disclosed.
• Total Hammer Value (THV): The total value of an auction event upon auction close minus buyer's premium fees and taxes.

Property Conditions

• "As Is": Selling the property without warranties as to the condition and/or fitness for a particular use. Buyers are solely responsible for examining and judging the property for their own protection.
• Condition: A written description of an asset's condition, usually provided in the lot description.

Auction Process

• Auction Block: The podium or raised platform where the auctioneer stands while conducting the auction.
• Bidder's Choice: A method of sale where the successful high bidder wins the right to choose a property or properties from a grouping of similar or like-kind properties.
• Lot: An item or set of items for sale in an auction, typically denoted by a "lot" number.
• Bulk Lots: Auction lots that contain multiple items, often similar in nature.
• Extension: The practice of extending the end time of an online auction when new bids are placed near the closing time.