I am considering hiring or consulting with an auctioneer? What should I do?
If you are considering an auction for your personal or business assets, consider the following tips:
Whether it be real estate, art or automobiles, select an Auction Professional with expertise in your particular type of sale. As a first step, considering contacting a member of the Auctioneers Association of Maryland. Another professional auctioneer’s organization is the National Auctioneers Associaton (NAA). Auctioneers who are members of professional auctioneer organizations like the Auctioneers Association of Maryland, are professionals well versed in the auction profession. Their education, commitment to the Code of Ethics, expertise and networking capabilities stimulate competition among bidders, securing you the highest prices for your assets.
What is a “buyer’s premium”?
A buyer’s premium is commonly used in auctions today as a form of payment for the auction company conducting the auction. The buyer’s premium is an advertised percentage of the high bid or flat fee added on to the high bid to determine the total contract price to be paid by the buyer.
What is the auctioneer saying?
The art of perfecting the auctioneer’s chant (also referred to as the auctioneer’s cry) takes years of practice, but understanding what auctioneers are saying is simple. The auctioneer’s bid call can be broken into two parts:
– The “Statement” – the current bid. For example, “I have five dollars”
– The “Question” – the asking price. For example, “Would you bid 10 dollars??
Example: I have 5 dollars, would you bid 10, would you bid 10? Now 10, I have 10 dollars, would you bid 15…
The cadence and repetition of words and use of “filler words” (that is, the “chant”) vary from one auctioneer to another, but the format is usually the same. Typically, the number the auctioneer keeps repeating is the dollar amount they are wanting.
Are auctions only for distressed, discounted, or low-valued properties or items?
This is a major misconception about auctions. The fact is auctions are the primary sales method when selling valuable assets such as vintage vehicles, multi-million-dollar homes and priceless pieces of art. The competitive bidding of an auction and the bidding of prospective bidders sets the price and market value of an asset. You should consider auctions as your first option, not the last resort.
The item will not sell for more than the highest bid and will not sell for less than the high bid. You, the consumer, and other bidders determine the market value of an item when you buy at auction.
Can I attend an auction as a spectator without having to bid or buy something?
Absolutely, we encourage people to explore auctions by attending one as a spectator. There is no better way to learn about auctions than to watch one firsthand. But be aware, you just might get “hooked on auctions”!
What does “as-is”, “where-is” mean?
One of the most common statements made at auction, “as is, where is,” simply means the property is being sold without warranty and that there are no contingencies based on the status of the asset being sold. It is important that you inspect all auction properties before you bid, both real estate and personal property.
Photos may not show all the details or potential faults with the asset and it is your job as a well-informed bidder to thoroughly inspect and know what you are bidding on BEFORE the start of the auction. Once you bid and buy an asset at auction, you are the new owner.
What is the difference between “absolute auction” and “reserve auction”?
There are two different type of auctions: those with reserve and those without reserve (sometimes referred to as absolute). NAA Auction Professionals should consult with their seller(s) to determine the best method suited to the seller.
– Absolute Auction: An “absolute auction” is an auction where the property is sold to the highest bidder. There is not a minimum or reserve price that must be met to complete the auction sale.
– Reserve Auction: A “reserve” auction means that a price has been set between the seller and the auctioneer that must be met to complete the sale. Reserves are often used to provide the seller with security that they receive at certain amount of money to meet their sale goal.
Who is the auction person “yelling” in the audience or on the floor at an auction?
The person you see and hear working amongst the crowd of bidders is known as a ringman. This individual is part of the auction team and is an extension of the auctioneer. The job of the ringman is to convey bids back to the auctioneer from the crowd.
When bids are received in the crowd, the ringman will signal the auctioneer (typically by saying “yes” in a loud voice) that they have received a bid and to increase the bid amount. These individuals are also there to help answer questions you may have while the auction is being conducted.
Do I need to have cash for pay for items or what are the payment terms at an auction?
It is important that prospective bidders read all documents regarding the sale prior to auction day. Cash payment is commonly not required at auctions. Auction companies may accept multiple forms of payment: cash, check or credit card. When attending real estate auctions, auction companies may at times require a specific down payment on-site in the form of a cashiers check to qualify as a bidder. Again, be sure to read the terms and conditions, especially the payment terms for each auction you attend as payment terms may differ among auction companies.