Bidding 101: Decoding Auction Lingo Like a Pro!
Every field, including auction houses, has its own special terminology that they use. Whether you want to become an auctioneer, you enjoy bidding on things, or you're just someone who likes watching auctions, knowing these special words will help you feel more confident and understand what's going on. So, here are some terms that will help you know how auctions work, from the very beginning to the end!
Types of Auctions
1. Live Auction: A live auction takes place in real-time, just like in TV shows or movies. An auctioneer is present along with bidders at the auction location. Nowadays, live auctions can also happen online (simulcast), where people can bid through the Internet or by phone. Bids are received by a clerk, and the highest bid wins the item as long as it meets the minimum price.
2. Timed Auction, Online Only: Timed auctions have a specific deadline and are conducted exclusively online. Bidding is automated, and the auctioneer sets the opening price before the online bidding starts. The bidding period could be a few hours or even a few days. Bidders can see each lot and its current bid before placing their bids. Bidders must bid at predetermined increments, and they receive emails about their bids, especially if they are the highest bidder. If someone outbids them, they will get an email notification to give them a chance to raise their bid.
3. Simulcast Auction: Live in-person and online bidding are offered at the same time.
Are you feeling puzzled or confused about the special words they use in auctions? If you're new to auctions, don't worry! We want to help you understand everything better, so you can have even more fun!
Bid: A bid is the price a bidder is willing to pay for an item. Bids are usually increased by a set amount to make the process organized and accurate.
Bid History: All the bids made during an auction are recorded on a list, which is known as the bid history. This list is kept even after the auction ends.
Bid Increment: The bid increment is the amount by which the auctioneer increases the bid. Usually, bidders have to bid at least 10 percent higher than the previous bid, but this may vary.
Bidding Increments: Bidding increments are predetermined price steps set by the auction house that dictate how much the bids must increase during the auction. These increments help maintain order in the bidding process and ensure that bids rise in a structured manner. By understanding the bidding increments, bidders can strategize and place competitive bids accordingly.
Buyers Fee: The "buyer's fee" is an additional charge or percentage applied to the hammer price of the item, and it varies depending on the auction house's policies. This fee is paid by the successful bidder on top of the hammer price and any applicable taxes. The buyer's fee helps cover administrative costs and contributes to the auction house's revenue.
Consignment: Consignment refers to the process where individuals or entities entrust their items to an auction house for sale. The auction house acts as an agent, offering the consigned items to potential buyers through their auction platform. The consignor (seller) and the auction house typically agree on terms such as reserve prices and commission fees before the auction takes place.
Drop Off: "Drop off" is the designated period when consignors bring their items to the auction house for inclusion in an upcoming auction. The auction house will specify the drop-off dates and times for consignors to submit their items. This process is critical to ensure that items are cataloged, photographed, and prepared for the auction in a timely manner.
Hammer Price: The "hammer price" is the final winning bid amount for an item when the auctioneer brings down the hammer, indicating the item is sold to the highest bidder. It does not include any applicable taxes, buyer's fees, or additional charges. The hammer price is the essential figure to consider when determining the actual cost of an item won at auction.
Inspection: The inspection period allows prospective bidders to examine the items up for auction before placing bids. During this time, bidders can assess the condition and quality of the items to make informed decisions about their bids. It is essential to take advantage of the inspection period to avoid any surprises or misunderstandings about the item's condition after the auction.
Lot: A lot refers to the item or items being auctioned off. Each lot is assigned a number to identify it during the auction.
Lot Number: The lot number is a unique identifier for each lot. It is used to link the lot to its corresponding spot in the auction catalog.
Outbid: When someone places a higher bid than the previous bidder, they are considered "outbidding" the other buyer.
Pick-Up: After winning an item at auction, the successful bidder is responsible for arranging the pick-up of their purchased items within a specified timeframe. The auction house will provide details regarding pick-up dates, times, and location. It is crucial for bidders to adhere to these instructions to avoid any storage fees or complications with obtaining the item.
Preview: The preview allows potential buyers to inspect and see the item or lot before the actual auction date. This helps them decide if they want to bid on the item or not.
Sold: When the auctioneer declares an item as "sold," it means that the highest bidder has successfully won the item. The auctioneer will usually state the final price and the bidder's number for confirmation. Once an item is sold, it is considered a final transaction, and the successful bidder is obligated to fulfill the payment and collect the item.
Soft Close: In an auction, a "soft close" refers to a specific mechanism designed to prevent sniping, which is when a bidder places a last-second bid to win an item. When a soft close is implemented, if a bid is placed within the final moments of the auction, the closing time of the auction will extend for a predetermined period, usually a few minutes. This extension allows other bidders the chance to counterbid and prevents bidding wars from being decided by mere seconds.
Understanding these essential auction terms will empower you to participate in auctions with confidence. Whether you're a seasoned bidder or a first-time auction-goer, decoding auction lingo will help you make informed decisions, avoid misunderstandings, and enhance your overall auction experience. To read more on the auction process, visit our Resources Page! Happy bidding!