FAQ about Auctions

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If you have questions about auctions, we have the answers! Below you can find the following information:

- Why Sell at Auction?

- How Do I Buy at Auction?

- How Auctions Work

- Auction Terms

- Auction Tips

- Auction History

Thank you to the National Auctioneers Association for this information.

 Auctions are the most unique and valuable way of selling almost any type of personal property. Some of the most popular auctions are those that involve household items, or livestock or antiques. But auctions involve so many more possessions: automobiles, office equipment, art, machinery, industrial equipment, electronics. One very rapidly growing area is real estate. More and more people are buying and selling their homes and land by the auction method.

People are Flocking to Auctions 
Auctions are one of the oldest forms of selling property; their history spans centuries. And time has only increased their popularity. A research study commissioned by the National Auctioneers Association shows that auctioneering is an industry on the rise.

Did you know that more than half of the total U.S. population has attended a live auction?

In 2004, the value of all goods and services sold at live auction in the U.S. was approximately $202.7 billion. This figure is up 6.8% over 2003 and translates into a huge number of satisfied buyers and sellers of goods.

They’re entertainment at their finest. That’s what most consumers say about auctions and that’s the number one reason they attend. So what makes them so fun and entertaining? Some say it’s the unexpected and the idea of experiencing something original.

All in all:

• 83% think auctions are an exciting way to get good deals
• 51% think they offer a great value on items
• 65% think auctions offer exciting items they wouldn’t otherwise purchase
• 53% like the excitement of getting a good price

In addition, consumers find auctions fun because they’re a rewarding activity for the whole family to enjoy. On average, consumers are willing to drive 1.3 hours to attend a live auction, with 75% bringing the family when they go.

The Value of Selling at Auction 
So how can auctions benefit you, as a seller? Why are they the best way to sell property? Well, there are a number of reasons

• Speedy Process, Quick Turnaround.
  An auction is immediate. It happens during a set time and is completed during that time. It’s quick and efficient.
• You Set the Time and Place of Your Sale. 
  It’s as simple as that. You work with the auction firm to schedule what works best for you.
• You Know Exactly When Your Property or Goods Will Be Sold. 
  There’s no wondering whether or not your property will sell. It WILL sell and it will sell during the set auction time.
• Comprehensive Marketing of Your Property. 
  Part of conducting an auction is marketing it to the general public to get as many people there as possible. Auctioneers have comprehensive mailing lists they use to market their sales. They run advertisements, distribute fliers and more. They are marketing specialists. A good marketing effort can easily bring 300 to 400 people to your auction, or more!
• Buyers Come Prepared to Buy. 
  Auction goers come with money in their wallets, pockets and hands and are prepared to come home with property. It’s a seller’s delight. For real estate auctions this is especially advantageous because buyers must qualify to buy through a deposit of a certified or cashier’s check.
• No Negotiations. 
  There is no haggling over price or merchandise. The auction method is quick and efficient. When people bid, they make a commitment to buy the property at that price without discussion or debate.
• No Leftovers and Little Clean Up. 
  Every item at an auction goes up for bid and every item is sold. How many of you have ever had a garage sale and when you’re finished, you spend hours packing up what didn’t sell and looking for places to store it? With an auction, there’s no worry about what to do with leftover items because there aren’t any. This means very little clean up, also.
• Competitive Bidding. 
  Auctions motivate buyers to perform. People get caught up in the competitiveness of the bidding and many times this drives the price of items higher. To some it’s like a game, and they want to win at all costs (or hopefully for you, at high costs!) And did you know that 9 times out of 10, an auction brings in the fair market value, if not more, for any item put across the auction block?
• Exciting Atmosphere. 
  There’s no more exciting atmosphere than an auction. Crowds of people competing for property, combined with that lively auction chant makes for some great entertainment and fun. (Give them a sample of your chant.) It makes people feel good and makes them feel like spending.
• Auctions Work Well in Both Good and Bad Economic Times. 
  People love auctions, because they love sales. Statistics show, in a good or bad economy auctions remain a steady force. When the economy is bad, the auction industry does not feel the impact: people still flock to auctions.

Hiring an Auction Company 
When you make the decision to sell by auction, the most important thing you must do is hire a qualified and experienced auctioneer or auction company to handle your auction.

There are thousands of auctioneers throughout the United States who offer a wide range of auction services to consumers. So what do you look for when hiring an auctioneer or an auction firm?

First, look for someone who specializes in selling the type of property you want to sell. All auctioneers have specialty areas and most have more than one. What do they know about the products or goods you are selling?

Experience is another critical element. How long has the auctioneer or the auction company been in business? What is their reputation? Look at their web site, if they have one.

Most importantly, look for an auctioneer who is a member of the National Auctioneers Association. Most will display this logo on their business cards, signs, web sites and other business materials. The NAA is the largest professional association for auctioneers in this country, working for the betterment of the auction industry. It offers continuing education programs for auctioneers to help them keep up-to-date on the latest trends and technology for the auction industry.

The NAA also offers a wide range of designation classes to make auctioneers “specialists” in areas such as personal property appraisal, real estate, estate auctions and more.

All members of the NAA abide by a code of ethics that guarantees high standards to customers and fair business practices.

In short, this symbol means you have made the best choice when it comes to auction services!

When meeting with the auction company:

• Ask about their contract or written proposal to provide you services. Get details on what is involved.
• Find out how the sale will be marketed. The success of the sale depends a great deal on the marketing effort behind it.
• Ask about setup and cleanup of the auction.
• Ask for references. And when you get them, check them out!

We work hard for our money, but most of us spend the majority of our waking hours working. Our money pays for our homes, our land, our automobiles, insurance, clothes, food, all of our possessions and so much more. So when it comes to selling those possessions and property, the smartest thing you can do is let an auctioneer help you continue to get the value you deserve. A professional auctioneer knows what land is worth, what household items and office equipment are worth, and what personal property is worth. A professional auctioneer will manage your sale so you can get a good value from these items in which you have invested your hard earned money.

You work hard for your money, and we will work hard for your money, too

 If you’re new to auctions, there’s nothing to fear. This step-by-step guide will show you just how easy it is to find, scout and participate in a live auction.

1. Find an auction
Use our auction locator to find an auction nearby. You can even search for a specific type of auction, if you’re just looking for antiques, dolls etc.

2. Preview the auction
Many auctions let you preview what is going on the auction block a few days—or even weeks—in advance. Once you’ve located the auction you want to attend, call the auctioneer or auction house to see if they will have a preview date.

3. Arrive early
On the day of the auction, try and get there early enough to register and get a good seat. It not only important for you to be able to see the auctioneer, but for the auctioneer to be able to see you.

4. Inspect
Carefully inspect any items you’re interested in. Are they damaged? Do you see other people looking at the same items? How much competition does it look like you’re up against?

5. Set a price
What are you willing to bid? You should have a number in mind, so you don’t go way over your budget in the heat of the moment. Don’t forget to include your total costs, like repairs, decorations, fees, and delivery charges. Use the bidder’s package you were given—if you were given one—at registration.

6. Bid
Have fun! Carefully follow the auction and get a feel for who you’re bidding against. And remember, the maximum bid you’re willing to make is just that; a maximum. Don’t jump to that number unless it’s necessary. You might very well get the item you want for much less.

7. Pay
If you win, find the Bookkeeper or Clerk and take care of your bill. You can also arrange for delivery at this time.

8. Enjoy
You just had fun and got a great deal. Now enjoy your new item(s)!

 When you arrive at the auction site you may need to register with the auctioneers in order to obtain a bidding number, the information required is usually your name and address and you may also need to pay a returnable deposit. You should be familiar with the registration requirements for the particular auction before you arrive in case a large deposit is required.

If you have not viewed the lots for auction prior to the auction day you will need to allow yourself time to inspect your prospective purchases before the auction starts if this is allowed, some auctions may not allow you to view the lots other than in the specified viewing dates and times, with some “catalogue” auctions you may not be allowed to view the lots after the auction has started. You should confirm these details with the auctioneers prior to the auction date.

When a lot you are interested in bidding on comes up for sale the auctioneer will announce the lot number ( either found in the catalogue next to the item or placed on the item during the viewing period ) and give a brief description of the item usually tied to the description given in the catalogue.

A starting bid will be suggested by the auctioneer and usually bidding will start below this price so do not assume the auctioneers starting bid is the lowest price available. If the item has a reserve price the auctioneer will often start the bidding above this price and reduce the start bid towards the reserve price until a bid is made. The auction catalogue will usually display a guide price for the item which is above the items reserve price.

You are free to start bidding at any time after the auctioneer has announced the starting bid. Some auctions especially liquidations, bankruptcies and receiverships have no reserve prices so give it a little time before you start your bidding, if there are no other bidders your first bid may be the price you pay.

If similar lots are listed together in the catalogue and you are the buyer of the first lot you may then have the option to purchase the similar lots at the same price as the first. When bidding it is usual to get the auctioneers attention by raising your hand or making some other clear gesture to the auctioneer followed by the amount you wish to bid if different to the auctioneers announced price. Now you have started bidding the auctioneer will return to you every time the bid is against you to see if you wish to raise your offer, a clear shake of the head will indicate to the auctioneer that you do not wish to continue bidding.

Bids go up in steps controlled by the auctioneer and until the bid nears the assumed final price a bid of less than this amount will not usually be taken.

If your bid is the final bid and the price reached is above the items reserve price you have been successful in your purchase.

After you have won the bid, you will have to pay an immediate deposit, the amount of deposit will be stated in the terms and conditions of the auction catalogue. The type of payment method i.e. cash, bank drafts, credit cards will be stipulated in the catalogue.

The amount of time given to pay fully for the purchase and clear the goods from the auction house will also be given in the catalogue.

Remember it is usual for the goods to be the responsibility of the purchaser after the hammer has fallen

If the items for auction are large, heavy or difficult to move, representatives of removal companies will usually be present, but this is worth checking with the auctioneers before you make your purchase.

 The following are some basic terms you might want to know when you go to an auction. Don’t worry though. There isn’t a test or anything. Just ask if you have questions.

Absentee Bid
This is a way that you can bid even if you cannot attend the auction in person. Check with the auction of interest to see if this is available and how they make the bids for you. Many places allow written absentee bids, phone-in bids, and even online bidding. In written absentee bids, you tell them what items to bid on and how high you will go. In phone-in bidding, you are actually on the phone in person, but you have to let them know what you want to bid on.Online bidding utilizes a bidding platform which uses the Internet to transmit your bids. These practices vary from auction to auction so be sure to ask each auction company you deal with how they do it prior to bidding.

Appraisal   The act of or process of estimating value.

“As Is”   Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as “As Is, Where Is” and “In its Present Condition.”

Auction Block  The podium or raised platform 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 his 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. Also known as an auction without reserve.

Auctioneer    The person whom the seller engages to direct, conduct, or be responsible for a sale by auction. This person may or may not actually call or cry the auction.

Bid   A prospective buyer’s indication or offer of a price he or she will pay to purchase property at auction. Bids are usually in standardized increments established by the auctioneer.

Bid Assistants   A form executed by the high bidder confirming and acknowledging the bidder’s identity, the bid price and the description of the property. Also known as Memorandum.

Bid Caller    The person who actually “calls,” “cries or “auctions” the property at an auction, recognizing bidders and acknowledging the highest bidder. Commonly known as the auctioneer.

Bidder Number    The number issued to each person who registers at an auction.

Bidder Package   The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at an auction. Sometimes called a bidder packet or due diligence package.

Bidder’s Choice   A method of sale whereby the successful high bidder wins the right to choose a property or properties from a grouping of similar or like-kind properties. After the high bidder’s selection, the property is deleted from the group, and the second round of bidding commences, with the high bidder in round two choosing a property, which is then deleted from the group and so on, until all properties are sold.

Bookkeeper or Clerk   The person who is responsible for the accounting and paperwork at an auction sale.

Buyer Premium    A percentage added on to your bid amount. Buyer premiums are used by many auction houses as a way of spreading the cost of the event with the people who benefit most from the opportunity to purchase; the buyer. It is an amount added to the high bid in addition to the high bid and payable by the buyer. This should be in the terms and advertising for the auction.

CAI   Certified Auctioneers Institute. The professional designation awarded to practicing auctioneers who meet the experiential, educational and ethical standards set by the National Auctioneers Association Education Institute.

Catalog     If an auction company makes a catalog available to you, be sure to get one. It can help you to know the description of the items sold and also how it will be sold. There may be a quantity of the commodity in each lot being sold and they may be for all one bid or so much apiece. Auction staff will be happy to explain these differences to you and your catalog will help you follow along. This way you won’t miss an item that is important to you.

Commission   The fee charged to the seller by the auctioneer for providing services, usually a percentage of the gross selling price of the property established by contract (the listing agreement) prior to the auction.

Estate Sale    The sale of property left by a person at his or her death. An estate auction can involve the sale of personal and/or real property.

Hammer Price   Price established by the last bidder and acknowledged by the auctioneer before dropping the hammer or gavel.

National Auctioneers Association   An association of individual auctioneers united to promote the mutual interests of its members; formulate and maintain ethical standards for the auction profession; promote the enactment of just and reasonable laws, ordinances and regulations affecting auction selling; make the public more aware of the advantages of auction selling; and generally improve the business conditions affecting the auction profession.

On-site Auction    An auction conducted on the premises of the property being sold.

Opening Bid    The first bid offered by a bidder at an auction.

Payment Arrangements    Most auction companies ask that you pay when you are finished bidding. Some may ask for downpayments when you register, as in auction of real estate. In many equipment auctions bid-assistants will ask for deposits as your purchases are increasing. It’s good to ask about this prior to attending so you are prepared when you arrive. For absentee bidding you may need to give a credit card and expiration date for payment, if you are successful.

Preview   Be sure to take advantage of the preview times made available for you to look over the items being offered for sale. Many times, auction items are slightly used so you will want to know if there are any defects, such as loose or missing table legs, a vehicle that doesn’t start, or glassware that has chips or cracks. While these may be acceptable to you, it may affect the amount you want to bid, so look before you bid. You will feel much more confident if you do this.

Reserve    The minimum price that a seller is willing to accept for a property to be sold at auction. Also known as the reserve price.

Sales Tax Exemption    The need to provide a tax exemption certificate will vary from state to state in the U.S. If you are a dealer, call to ask what will be needed. If you have a dealer number for tax exemption purposes, carry it with you when you attend auctions.

Sealed Bid    A method of sale utilized where confidential bids are submitted to be opened at a predetermined place and time. Not a true auction in that it does not allow for reaction from the competitive marketplace.

Seller   Entity that has legal possession, (ownership) of any interests, benefits or rights inherent to the real or personal property.

Tax Sale    Public sale of property at auction by governmental authority, due to nonpayment of property taxes.

Terms and Conditions   “Terms and Conditions” are something you will likely see at every auction you attend. They will vary a according to the type of commodity being sold and the auction company. What we are showing you here are some things that are typical and that you should know. Please be sure to check the Web site or on-site glossary for each individual auction.

Types of Payments Accepted   This can range from cash only to cashier’s checks or personal checks and credit/debit cards. Many times you will need a positive ID such as a driver’s license or other government ID when you register for the first time.

Tie Bids   When two or more bidders bid exactly the same amount at the same time and must be resolved by the auctioneer.

 A few suggestions to help you not only bid successfully, but to enjoy the auction experience.

Pack the items you’ll need before you leave for the auction. Some suggestions:

• A small flashlight to check details on anything you’re thinking about bidding on
• A pen and paper
• A value book
• Identification, checkbook, and your seller’s ID if you are buying for a business.
• 
  

Dress comfortably. Remember, it might be hot/cold outside but the air conditioning/heat might be working overtime inside.

Eat something before you go. There’s a good chance you won’t have access to food while you’re there.

Save a seat before you look at the preview. Popular auctions fill up fast, and you will want to be close to the front if you are bidding. This is one time where it’s good to be the teacher’s pet.

Ask what types of payment are accepted. If the auction house charges a buyer’s premium and inquiries about hauling/delivery concerns before you bid.

Don’t bid on anything you don’t examine in the preview. Unless you really, really want to.

Pay attention! Make sure you know what item number is being bid on at all times, or else you might end up taking home that 1972 Formica table instead of that 1850 antique one.

Raise your paddle to bid. Once you’ve been acknowledged, further bids on an item can be made by a nod of the head, etc. Don’t worry; sneezing won’t accidentally put you into the poor house.

If you’re traveling to the auction, make sure you have a way to get the items you purchase packed properly and home with you. Remember, bubble wrap is your friend.

 It seems that auctions have touched almost every century, every industry and every nationality – this list I gave you was just a small sample. Auctions date back so far in history, that no one really knows for sure how they started or who started them.

The First Auctions
Records handed down from ancient Greek scribes document auctions occurring as far back as 500 B.C. At that time, women were auctioned off as wives. And, in fact, it was considered illegal to allow a daughter to be “sold” outside the auction method.

A “descending” method was used for these auctions, starting with a high price and going lower until the first person to bid was the purchaser, as long as the minimum price set by the seller was met. The buyer could get a return of money if he and his new spouse did not get along well, but unlike a horse, maidens could not be “tried” before auction.

Women with special beauty were subject to the most vigorous bidding and the prices paid were high. Owners of the less attractive women had to add dowries or other monetary offers in order to make the sale.

In Rome, Italy, around the time of Christ, auctions were popular for family estates and to sell war plunder. Roman Emperor and philosopher Marcus Aurelius sold family furniture at auctions, for months, to satisfy debts.

Roman soldiers sold war plunder at auction. The licensed auctioneer, called “Magister Auctionarium,” drove a spear into the ground to start the auction. Today we use an auction gavel.

Auctions Come to America 
American auctions date back to the Pilgrims’ arrival on America’s Eastern Shores in the 1600s and continued in popularity during colonization with the sale of crops, imports, clapboard, livestock, tools, tobacco, slaves and even entire farms. Selling at auction was the fastest and most efficient means to convert assets into cash.

Fur was especially big during this time. In his book, “Going, Going, Gone!,” Bellamy Partridge says “the Bible and the beaver were the mainstays of the Pilgrims, the Good Book saving their souls and the beaver paying their bills.”

Initially, the furs were collected from Native Americans in the fall and winter, utilizing the “private treaty” method of exchange for “wampum” (the Native American word which meant money). The raw pelts (or hides) were transported to the closest shipping port. In the spring of each year, the auction method was used to sell the raw peltries to the European merchants who arranged the transcontinental voyage to the Old World. Once the ships returned to the port in Europe, the peltries were auctioned to manufacturers, who would process them for the retail market. The early fur trade was chiefly responsible for the settlement and development of North America.

Civil War Era 
Have you ever heard an auctioneer referred to as “Colonel?” It’s a fairly common practice, especially at auction schools across the country. This came about during the Civil War era, a time when auctions were beginning to flourish.

History has it that the art of auctioneering was a common practice for Civil War Colonels who regularly auctioned off the spoils of war and surplus. However, only officers of the Colonel rank could conduct them, spawning the use of the term “Colonel” by many auctioneers still today.

A short historical narrative from one of the top auction schools details this process: “As the Civil War progressed, many troop battalions made a practice of seizing property of land owners and merchants as they marched. Contraband would be collected and carried to a favorable area, then the Colonel or commanding officer would sell the goods at public sale. Even after the Civil War, military Colonels traveled to sell surplus goods and seized goods. Auctioneers followed some of the same trails and dressed similar to army Colonels to such an extent that the public began to recognize auctioneers as ‘Colonel.’

Other Names for Auctioneers 
Colonel is only one name that auctioneers have been identified with over the years. Other names include “Knights of the Hammer,” and “Brothers”.” The tools of these auctioneers included the Colonel style hat, a cane, bell, hammer or gavel, and a red flag. The flag, often boasting advertising, was placed above where the auctioneer would sell on the day of the auction.

Opening of Auctions Schools 
Many auction schools started in the early 1900s in America. The Jones’ National School of Auctioneering and Oratory was believed to be the first. It was started by auctioneer Carey M. Jones in Davenport, Iowa. For the first term, the school promoted “competent instructors teaching general merchandise, real estate and fine stock auctioneering.” However, many auctioneers at that time did not believe an auctioneer could be “trained.” They believed that auctioneering was a natural ability that you were born with.

Challenges for Auctioneers 
Though finding goods to sell was not a problem in those days, auctioneers faced other challenges. There was no amplification system for their voices – no microphones as we know them today. So they had trouble both being heard, and keeping their voices intact.

Because travel was more difficult, and was mostly by horse and wagon, auctioneers enticed crowds by routinely offering lunch to those who came to the sale. Weather often dictated the time the auction started, as all were held outdoors.

The Great Depression 
The growth of the auction industry remained until the Great Depression of 1929. Some auctioneers traveled the country to liquidate the estates of farmers whose farms had failed because of drought and bank foreclosures. The decline of the auction method of marketing followed the poor economic climate and did not rebound until after World War II.

The 1950s 
Auctioneering began to make great strides after World War II. The sale of goods and real estate was booming. There was a need in certain cases to move real estate and personal property faster than the private market would allow. Thus, the modern day auction business was born. Auctioneers were now businessmen who dressed in suits and ties. They began to nurture the business and raise the reputation of auctioneers. Besides the public, auctioneers began to have links to banks, attorneys, accountants, the court system and government agencies.

The 1990s through Today
During the 1990s, technology was finding its way into the auction business. Auctioneers were using computers, fax machines, cell phones and other technology to make their businesses run faster and more smoothly. Some auctioneers began taking photographs of small auction items and projecting them onto big screens so the crowds could get a closer look at the merchandise.

Auctions burst into cyberspace in the middle of the decade. The ever flourishing eBay was launched in 1995 and would go on to become an “online leader” in the bidding business.

Many auctioneers today offer both live and online auctions to meet the needs of customers near and far. Technology allows buyers to participate in the sale without even being there.

The Future of Auctioneering 
Over the years auctioneering has progressed and changed, and today it remains more popular than ever. Most everything thinkable has been sold by the auction method of marketing: antiques, household items, automobiles, land, livestock, homes, designer dresses, business equipment, and more. And thanks to professional organizations like the National Auctioneers Association, auctioneers are privy to countless educational opportunities that help them to keep up on the latest technology and learn new business traits. They network with other auctioneers to exchange ideas and to find ways to continue to meet the growing needs of the American public.

Auctioneers today are working to earn specialty designations such as Graduate Personal Property Appraiser (GPPA) , Accredited Auctioneer Real Estate (AARE), Certified Auctioneers Institute (CAI) and Certified Estate Specialist (CES). (Tell about any designations you have or classes you have taken.)
NAA auctioneers are also bound by a code of ethics that protects consumers against fraud and unfair business practices.

Auctions have been around since the beginning of time because they are a highly efficient and effective business tool – and they meet the needs of the public. But, they also are fun, entertaining and theatrical. Most people who attend an auction keep wanting to go back again and again.

If you have never been to an auction, join in and become part of history.