Auction Terms You Need To Know

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Before you participate in your first auction, there are a couple words and terms you need to need to understand.

Absentee/proxy bid

An absentee bid is where the auctioneer will bid on your behalf if you are unable to participate in the auction on the day. For live auctions, the bidder will sign a proxy for an agent at the auction house to bid on your behalf. For an online auction, the bidder is able to place a maximum bid and the system will bid on their behalf. 

Auction

A public sale in which goods or property are sold to the highest bidder. Can be held at venue as a live event or online using a bidding platform.

Auctioneer

A person who conducts auctions by accepting bids and declaring goods sold.

Bid

The price or amount that the potential buyer places during the auction.

Bidder/paddle number

The number assigned to each registered bidder. This allows for the bidder to remain anonymous.

Commission

The amount the buyer pays the auctioneer for running the auction. This is usually over and above the hammer price. This is typically calculated as a percentage of the selling price.

Registration Requirements

Before a bidder can take part in the auction, the bidder usually has to pay a refundable deposit and send through FICA documents. The refundable deposit is refunded should the bidder not buy anything. If the buyer has bought, this is deducted from their sales invoice. 

Ghost bidding

Where sellers and/or auctioneers use fake bidders, to place false bids on auctions in an attempt to increase the price of goods they are selling beyond fair market value. This is an illegal practice in South Africa. This is different to Vendor Bidding.

Hammer price

The final sale price at auction, or the ‘fall of the hammer’ price. No bids can be accepted after the hammer has fallen, and the highest bidder is legally ordered to buy the item.

Outbid

When a bidder places a counter offer / bid higher than your bid and therefore you are no longer winning the lot.

Reserve

The minimum amount the owner will accept for the item. The reserve price can be amended at any time prior to the auction start, but it needs to be in writing.

Starting price

The lowest possible bid the first bidder must place. Often this amount is determined by the first bidder willing to make an offer. 

Vendor Bidding

The process whereby an auctioneer is allowed to enter bids at an auction on behalf of the seller up to a stated reserve price in order to ensure that a market-related sale is achieved.

Auction Terms specific to timed online auctions

Bid Increments

The standardized amount an item increases in price after each new bid. The auction service sets the increment, which goes up in these set amounts as each bid is placed.

Lot staggering 

All lots close after each other according to a pre-loaded schedule. Therefore lot 1 closes at the advertised lot close, lot 2 closes one minute after that, and so on. This is there to give bidders the opportunity to bid on multiple lots.

Anti-Sniping

All auctions have an anti-sniping mechanism – this means that if there is a bid in the last 2 minutes of the lot close, that specific lots time will extend by 2 minutes. This is to give time to the other bidders to place a counter bid. Much like the going, going, gone at the end of a live auction lot

Auto Bid

This is when a bidder sets an absentee bid and the system bids on their behalf. These bids are immediate.

Hope these help, let us know if we’ve left any out.

The Online Auctions Team

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