Auction Terminology

We share a lot of articles discussing and evaluating auctions and have received some questions from clients about what certain terms mean. Below, please find a list of terms and phrases that you might come across if you ever find yourself at an auction or reading an article we share.

Absentee Bid A method of bidding for those who cannot or do not wish to attend an auction. Absentee bids are also called “written,” “commission” or “order” bids and may be placed by filling out and submitting an Absentee Bid Form. Absolute Auction An absolute auction is a type of auction in which the sale is awarded to the highest bidder. Absolute auctions do not have a reserve price, which sets a minimum required bid for the item to be sold. Appraisal A formal evaluation of the fair market and/or insurance value of a given auction item. The fair market value represents what the auction house believes an item would bring at auction. Insurance value reflects what it would cost to replace an item. A Valuations department conducts appraisals by comparing a piece with similar, recently sold items, but no appraisal is definitive. You do not need a formal written appraisal in order to obtain a presale auction estimate. Auction Block The podium or raised platform is where the auctioneer stands while conducting the auction. “Placing (an item) on the auction block” means to sell something at auction. Auction With Reserve An auction in which the seller or seller’s 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. Auction Without Reserve (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. A benefit to a no-reserve auction is that it can draw in a larger number of bidders who are looking for a deal. In this type of auction, there can't be a minimum bid and the seller can’t reject or decline any bid. Typically, more bidders equal higher sales prices. Auctioneer The person whom the seller engages to direct, conduct, or be responsible for a sale by auction. This person may or may not call or cry the auction. Bid Increment The amount by which the auctioneer increases the bidding. In general, the auctioneer will request bids of about 10% higher than the previous bid. The figure is generally rounded up or down at the auctioneer's discretion.

Bought-In If there are no bids on a lot, or if bidding does not reach the reserve price, the lot is “bought in,” meaning it is left unsold and remains the property of the owner.

Buyer’s Premium The amount above the hammer price (see below) that is paid as part of the total purchase price.

Cataloging Factual information about a lot offered for sale, such as a detailed description of the object, its provenance (history of its ownership), major exhibitions in which it has appeared, and publications in which it has been documented. Consignor The owner who is transferring property to an auction house to act as an agent on his or her behalf for sale. Designation The consignor of a lot is sometimes identified through a designation line, which appears at the beginning of a catalog entry. The designation, which appears at the discretion of the consignor, may identify the current owner by name or through a descriptive title, such as “Property of a Distinguished European Collector.” Estimate Each lot is given a low and high estimate, representing the opinion of experts about the range in which the lot might sell at auction. Estimates are based on the examination of an item and recent auction records of comparable pieces. Published in online and printed catalogs, an estimate provides prospective buyers with an important preliminary guide to value and is generally the basis for establishing the reserve price. Fair Market Value A term frequently used by appraisers referring to their judgment and opinion about an object’s likely sale price if offered by a willing seller to a willing buyer. Since the auction process is open to all bidders, a sale at auction is considered to be a measure of Fair Market Value. Fair Warning A warning is sometimes given by the auctioneer that the hammer is about to come down on a lot. The fair warning offers one last chance to increase the bidding. If there are no subsequent bids, the auctioneer’s hammer falls, and the sale is completed. Gavel Another name for the auctioneer’s hammer used to close the bidding. Guarantee In rare cases, an auction house will guarantee to pay a consignor for a lot, regardless of whether the bidding at auction reaches the reserve price. The guarantee may be provided by the auction house, by a third party, or jointly by the auction and a third party. Third parties providing all or part of a guarantee benefit financially if a guaranteed lot is sold successfully and may incur a loss if the sale is not successful. Hammer Price The winning bid for a lot at auction. It is the price upon which the auctioneer’s hammer falls, determining the sale price, but does not include the buyer's premium. Knocked Down An auction house term for the hammer coming down and ending the bidding, as in, “The lot was knocked down at $1 million.” Lot An individual object or group of objects offered for sale at auction as a single unit. Paddle An object displaying the number assigned to a bidder when he or she registers at the auction. To place a bid, simply raise your paddle until the auctioneer acknowledges you. If you win the auction, your paddle number is recorded alongside your bid. To pay for your purchase, you will need to bring your paddle to the Payments counter. Provenance An important part of the authentication process, provenance establishes the chain of ownership back (if possible) to the date an item was created or discovered. Provenance can significantly impact the value of an object. Items with historical significance sell for much higher at auction. Reserve or Reserve Price Never formally disclosed, the reserve price is the confidential minimum price agreed upon between the consignor and the auction house. Reserves must be set at or below the low estimate, and if bidding ends before the reserve is reached, the property will not be sold.

Valuation A detailed description and current value of the item prepared by the auction house’s staff. Valuations, which differ from auction estimates, are used for a variety of needs, including charitable contributions, collateral loans, estate taxes, estate planning, and insurance.

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