Frequently Asked Questions

• Only used as a last resort
• Auctions are Fire Sales and everything is sold at a discount
• Only distressed property and junk is sold at auction
• You only see Auctioneers when there is…
  – Debt
  – Death
  – Divorce
  – Distress

• Auctions have existed for over 2,000 years and is the truest method of price discovery.
• The competitive bidding of an auction determines the market value of an asset.
• Auctions generate excitement and allow interested buyers the opportunity to gather and tell the Auctioneer how much they are willing to pay for an asset.

“Priceless” works of art are ONLY sold at auction!

Why?

The competitive bidding of an auction determines the market value and establishes the highest price a consumer is willing to pay.

No More. No Less.

• “Auction” derives from Latin word “auctus” which means “increasing”.
• Records of the first auction date back as far as 500 B.C.
• Rome was the first country to license Auctioneers and the entire empire was once sold at auction.
• American auctions date back to the 1600s.
• America’s first president, George Washington,  was an avid auction bidder.
• The common Auctioneer nickname of “Colonel” derives from the Civil War where colonels were the only military official allowed to auction off war plunder.

• Aide clients in the disposal of assets and assist in turning assets into cash efficiently and effectively
• Coordinate and promote auction of assets
• Market and advertise assets engaging prospective buyers
• Appraise value of assets
• Restore and repair assets charged with selling
• Track and maintain records of items sold

• The auction team coordinates the auction, prepares the assets for sale and appraises their value
• Auctions are professionally marketed locally, nationally and internationally.
• Auctioneers utilize technology to increase bidder participation.
• Auctioneers create a competitive atmosphere among bidders achieving the market value for the assets they are charged with selling.
• Buyers come to auctions to find unique items and compete against other interested buyers.

• Professional association built by Auctioneers, for Auctioneers over 60 years ago
• Members abide by strict Code of Ethics
• Members come from communities large and small across the country and world
• The NAA and its members are dedicated to professionalism in the auction profession and the promotion of the auction method of marketing

The pros include:

• You enjoy simple sales process that requires no negotiating on your end.
• The buyer pays all the real estate commissions (and a non-refundable deposit!).
• The auction deadline creates buyer urgency.
• The typical time line is 3-4 weeks or less which eliminates carrying costs faster.
• You set the terms and day of your auction so that you can plan your life accordingly.
• The sale isn’t contingent on inspections and appraisals.
• Buyers can’t ask you to do additional work or pay additional expenses since properties sell as-is.
• The competitive bidding process helps you receive the true market value for your house.
• Experienced professionals handle all the marketing, promotion, paperwork and the auction event.

The cons include:

• Marketing for an auction requires seller participation (in lieu of a commission).
• Since bidders must meet stricter terms, the buyer pool is different than that for a private home sale.
• Some buyers mistakenly assume all auctions are for distressed properties.

Auctions are used to sell residential and commercial property, as well as land. The properties sold by professional auction companies are usually similar to those sold directly by owners. So how do you decide whether an auction is the right way to sell your home?

The National Association of Realtors suggests the two-thirds rule to determine whether selling a house at auction is the best decision for your situation. Assess the market, the property and your situation. If two of these situations favor an auction, it’s usually a good way to sell your property.

The Market

Auctions are a good way to sell homes in a variety of markets. To maximize the value of an auction, look for a market that:

• Is changing rapidly
• Has buyer interest but some inactivity
• Views your property as unique (custom architecture or unique views can make it appealing to the market)
• Has a high demand for sellers
• Has an inventory shortage (buyers will compete aggressively)
• Has an inventory surplus (buyers will be drawn to auction opportunities over traditional listings)

The Property

Consider an auction when the property:

• Has high equity
• Has high carrying costs for the seller
• Is unique or difficult to value accurately
• Needs specialized marketing or broader exposure to attract the right buyers

The Seller

Ideal auction situations include scenarios when the seller:

• Is downsizing
• Has a moved scheduled
• Needs cash quickly
• Wants to liquidate an estate, possibly including contents
• Has some equity
• Would rather not do work on the property
• Is not interested in negotiations or other direct involvement
• Is not expert in real estate matters
• Has already purchased another property
• Prefers not to pay traditional Realtor commission

As a side note, auctions are an ideal way to help elderly persons sell a home when downsizing.If you’re helping a family member in the Baltimore county or Baltimore City and are unsure about Auctions, consider our SRES-Certified Agent/partner Dan Cohen. We’ll work with you and your family to make their move easy while securing the greatest values for their home and unneeded personal property.

In addition to vast differences in marketing strategy and purchase terms, your timeline for selling your home is one of the most important considerations when deciding between FSBO and an auction. Selling a house via auction marketing usually takes no more than 30 to 45 days (often less), and the auction itself is simply the conclusion of the process. Most of the work happens leading up to the auction and is focused on promoting your property and the bidding opportunity. Here are the three steps to the auction process:

• Step 1: Determine the Time Line and Approach. The experienced staff at Braun Auctions will consult with you to recommend the best way to maximize the auction approach. We will evaluate your property and provide a thorough market analysis. We will discuss your goals, preferred scheduled and financial requirements in building out a specific auction strategy for the sale of your home.
• Step 2: Promoting Your Property. Next, we’ll devise and execute a custom campaign to advertise your property and the auction event. By design, auctions have a short window with a definite deadline, so we only have a few weeks to engage all the potential bidders for your house. In contrast to limited advertising common to open-ended FSBO efforts, we focus on saturation marketing which employs multiple channels simultaneously and repetitively during the brief advertising period.

A well-planned and property-specific marketing campaign with a clear call to action is crucial for selling a home at auction. We use a wide variety of channels to reach potential bidders, both online and in person. We use a combination of signage, print media, MLS and other listings, online marketing, direct mail, digital advertising and social media to promote a home. We also reach out to buyers’ agents directly.

During this time, we’ll host pre-sale inspections of the property for potential bidders and provide them with more information about the house, encouraging pre-auction offers and advance online bidding.

Throughout this phase, we’ll keep you updated with detailed weekly reports of all our activities and results.

• Step 3: Auctioning Your Property. The actual bidding will take place online. Bidders will register and submit their bids online. The winning bidder will pay the non-refundable deposit online also. “Online Only” auctions are usually open for several weeks, allowing bidders the participate at their convenience.

Once the auction ends, the winning bidder is responsible for paying the non-refundable deposit and signing contracts immediately. We’ll work with the title company, buyer and seller to complete the closing process according to the auction terms.

Absentee Bid
A procedure that allows a bidder to participate in the bidding process without being physically present. Generally, a bidder submits an offer on an item prior to the auction. Absentee bids are usually handled under an established set of guidelines by the auctioneer or auction company. The particular rules and procedures of absentee bids are unique to each auction company.

Absentee Bidder
A person (or entity) that is not present at the auction but submits, in advance, a written or oral bid that is the top price they will pay for a given asset.

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.”

Accounting of Sale
A report issued to the seller by the auctioneer or auction company detailing the financial aspects of the auction.

Accredited Auctioneer Real Estate (AARE)
The professional designation awarded by the NAA Education Institute to qualified real estate auctioneers who meet the educational and experiential requirements of the Institute and who adhere to a strict code of ethics and standards of practice. In order to be designated with the AARE, auctioneer-scholars are required to complete 42 classroom hours, a detailed written auction summary report, proof of at least 10 real estate auctions, and 24 hours of continuing education every three years.

Agent
A person who acts on behalf of another individual or entity.

American Bankruptcy Institute (ABI)
The American Bankruptcy Institute is the largest multi-disciplinary, non-partisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues.

America Society of Appraisers (ASA)
The American Society of Appraisers is an international organization of appraisal professionals and others interested in the appraisal profession. ASA is the oldest and only major appraisal organization representing all of the disciplines of appraisal specialists.

Appraisal
A written or oral statement, independently objectively and impartially prepared by a qualified appraiser, prepared in accordance with generally accepted appraisal standards, setting forth an opinion of defined value of an adequately described asset, as of a specific date, supported by the presentation and analysis of relevant market information.

Appraisal Foundation, The
A not-for-profit organization dedicated to the advancement of professional valuation, established by the appraisal profession in the U.S. in 1987. Since its inception, the Foundation has worked to foster professionalism in appraising. It is authorized by Congress as the source of appraisal standards and appraiser qualifications.

Apprentice Auctioneer
An auctioneer who is in training, operating under the supervision of a licensed or experienced auctioneer.

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."
A method of selling property in a public forum through open and competitive bidding. Also known as “public auction” or “auction sale.”

Auction
A method of selling property in a public forum through open and competitive bidding. Also known as “public auction” or “auction sale.”

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 Listing Agreement
A contract executed by the auctioneer and the seller which authorizes the auctioneer to conduct the auction and sets out the terms of the agreement and the rights and responsibilities of each party.

Auction Marketer
An individual who contracts with sellers for the auction method of marketing property. In the case of real property, the individual may not actually conduct the sale but is directly responsible for all aspects of marketing the property.

Auction Marketing
The method of marketing assets utilizing the auction method of sale.

Auction Plan
The plan for pre-auction, auction-day and post-auction activities.

Auction Price
The price of a property obtained through the auction method of marketing.

Auction Subject to Confirmation
(See "Reserve 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
(See "Absolute Auction")

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.

Ballroom Auction
An auction of one or more properties conducted in a meeting room facility.

Bank Letter of Credit
A letter from a bank certifying that a named person is worthy of a given level of credit. Often requested from prospective bidders or buyers who are not paying with currency at auctions.

Benefit Auction Specialist (BAS)
A professional designation awarded by the NAA Education Institute designed to teach professional auctioneers the planning techniques that create successful benefit auctions. BAS auctioneers learn marketing skills and create a business strategy to build their clientele and profits. In order to be designated with the BAS, auctioneer-scholars are required to complete 21 classroom hours, a detailed written auction summary report, proof of at least six benefit auctions and 24 hours of continuing education every three years.

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

Bid Acknowledgment
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 Assistants
Individuals of a live auction team whose primary responsibility is to accurately interpret and effectively communicate buyer participation to their auctioneer. They should also be qualified to assist prospective bidders with the necessary information to make a better informed buying decision. Also known as “ringmen”, “bid spotters” or “groundsmen.”

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.

Bid Rigging
The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value. See “Collusion”.

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. Also referred to as “bidder packet” or “due diligence packet.”

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

Bookkeeper or Clerk
The individual responsible for the accounting and paperwork at an auction sale.

Broker Participation
An arrangement for third-party brokers to register potential bidders for properties being sold at auction for a commission paid by the owner of the property or the auction firm.

Buyer's Broker
A real estate broker who represents the buyer and, as the agent of the buyer, is normally paid for his/her services by the buyer.

Buyer's Premium
An advertised percentage of the high bid or flat fee added to the high bid to determine the total contract price to be paid by the buyer.

Caravan Auctions
A series of on-site auctions advertised through a common promotional campaign.

Carrying Charges
The costs involved in holding a property that is intended to produce income (either by sale or rent) but has not yet done so, i.e., insurance, taxes, maintenance, management. Also known as “holding costs”.

Catalog or Brochure
A publication advertising and describing the property(ies) available for sale at public auction, often including photographs, property descriptions and the terms and conditions of the sale.

Caveat Emptor
A Latin term meaning "let the buyer beware." A legal maxim stating that the buyer takes the risk regarding quality or condition of the property purchased, unless protected by warranty.

Certified Auctioneers Institute (CAI)
The professional designation awarded to practicing auctioneers who meet the experiential, educational and ethical standards set by the NAA Education Institute. In order to be granted the CAI designation, auctioneer scholars must have been practicing full-time auctioneers for at least two year (prior to attending the institute), attend all three years of CAI with more than 120 classroom hours, complete all special projects and complete 24 hours of continuing education every three years.

Certified Estate Specialist (CES)
A professional designation awarded by the NAA Education Institute to help professional auctioneers understand how to properly conduct and deal with the settling of estates. The course also educates professional auctioneers on working with family members and dealing with lawyers and accountants. In order to be designated with the CES, auctioneer-scholars are required to complete 21 classroom hours and complete 24 hours of continuing education every three years.

Clerk
An individual employed by the principal auctioneer or auction firm to record what is sold and to whom and for what price.

Collusion
The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value or when the auctioneer accepts a fictitious bid on behalf of the seller so as to manipulate or inflate the price of the property.

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.

Conditions of Sale
The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer's premiums, possession, reserves and any other limiting factors of an auction. Usually included in published advertisements or announced by the auctioneer prior to the start of the auction. Also known as “Terms & Conditions”.

Conference and Show (C&S)
Annual conference and exposition of the National Auctioneers Association. Also known as “International Auctioneers Conference & Show”.

Continuing Education Units (CE's or CEU)
A measure used in continuing education programs, particularly those required in a licensed profession in order for the professional to maintain the license.

Contract
An agreement between two or more persons or entities which creates or modifies a legal relationship.

Cooperating Broker
A real estate broker who registers a prospective buyer with the auction company, in accordance with the terms and conditions for that auction. The broker is paid a commission only if his prospect is the high bidder and successfully closes on the property. Also known as a “participating broker”.

Critical Path
Sequence of key tasks to be done by auction contractor or other designated parties on specified dates, leading to desired goals.

Dual Agency
The representation of opposing principals (buyers and seller) at the same time.

Due Diligence
The process of gathering information about the condition and legal status of assets to be sold.

Education Institute (EI)
NAA members are selected by the NAA Board of Directors to be Trustees of the Education Institute and carry out the association’s mission of continuing education to NAA members.

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.

Federal Deposit Insurance Corporation (FDIC)
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system by insuring deposits, examining and supervising financial institutions for safety and soundness and consumer protection, and managing receiverships.

Federal Home Loan Banks (FHLB)
The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world.

Federal Housing Administration (FHA)
The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world.

Graduate Personal Property Appraiser (GPPA)
The professional designation awarded by the NAA Education Institute to qualified property appraisers who meet the educational and experiential requirements of the Institute and who adhere to a strict code of ethics and standards of practice. In order to be designated with the GPPA, auctioneer-scholars are required to complete 35 classroom hours, a detailed written appraisal report and proof of at least two affidavits of appraisals. This designation also requires 24 hours of continuing education every three years.

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

Intellectual Property (IP)
IP is a term referring to a number of distinct types of legal monopolies over creations of the mind, both artistic and commercial, and the corresponding fields of law. Under IP law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; words, phrases, symbols and designs.

International Auctioneer Champion (IAC)
Annual contest hosted by the National Auctioneers Association at its Conference & Show for bid-calling auctioneers. Each year, one female and one male auctioneer is declared the winner of the IAC.

International Society of Appraisers (ISA)
The ISA is a not-for-profit, member-driven association formed to support ISA member needs and serve the public by producing highly qualified and ethical appraisers who are recognized authorities in professional personal property appraising.

Listing Agreement
See “Auction Listing Agreement”.

Listing Broker
A real estate broker who has a listing on a property and cooperates with the auction company by allowing the auction agreement to supersede their listing agreement.

Livestock Marketing Association (LMA)
The LMA is an association committed to the support and protection of the local livestock auction markets and the livestock marketing industry.

Market Value
The highest price that a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Master Personal Property Appraiser (MPPA)
A professional designation awarded by the NAA Education Institute to help professional auctioneers learn the responsibilities of appraising assets. Designees are taught to conduct a complete and appropriate appraisal, as well as taught to know the various factors that affect the value of appraised items. MPPA designees specialize in one or more of the following areas: antiques & estates, plant machinery & equipment, construction & agricultural equipment or small business valuation. In order to be granted an MPPA designation, the auctioneer must already be credentialed with the GPPA.

Memorandum
Also referred to as a "Bidder Acknowledgment," or "Broker Acknowledgment," the memorandum is signed by those parties either on the auction floor or in the contract room.

Minimum Bid Auction
An auction in which the auctioneer will accept bids at or above a disclosed price. The minimum price is always stated in the brochure and advertisements and is announced at the auctions.

Multi-Property Auction
A group of properties offered through a common promotional campaign. The properties to be auctioned may be owned by one seller or multiple sellers.

Multi-Seller Auction
Properties owned by multiple sellers, offered through a common promotional campaign and auctioned in a single event.

Multiple Listing Services (MLS)
The MLS is a suite of services that enables brokers to establish contractual offers of compensation (among brokers); facilitates cooperation with other broker participants; accumulates and disseminates information to enable appraisals; and is a facility for the orderly correlation and dissemination of property listing information to better serve broker's clients, customers and the public.

National Association of Realtors (NAR)
The core purpose of the NAR is to help its members become more profitable and successful.

National Auctioneers Association (NAA)
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.

National Auto Auctioneers Association (NAAA)
Founded in 1948, the National Auto Auction Association represents more than 317 auto auction companies, both domestic and international, with more than 8.9 million units sold each year.

No-Sale Fee
A charge paid by the owner of property offered at a reserve auction when the property does not sell.

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.

Other Real Estate Owned (OREO)
Real property owned by a banking institution that is not directly related to its business. In balance sheet terms, OREO assets are considered non-earning assets for purposes of regulatory accounting. OREO is most frequently a result of foreclosure on real property as a result of default by the borrower who used the property as collateral for the loan. Most items in this category are available for sale.

Participating Broker
See “Cooperating Broker”.

Preview
Specified date and time property is available for prospective buyer viewing and audits. Also known as “Open House” or “Inspection”.

Real Estate (RE)

Real estate, also known as real property, is a legal term that encompasses land along with improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location -- immovable.

Real Estate Owned (REO)
REO is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction. A bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the bank will legally repossess the property. As soon as the bank repossesses the property, it is listed on their books as REO and is categorized as an asset (non-performing).

Referring Broker
A real estate broker who does not have a listing on a property but refers the auction company to a potential seller for an auction. Usually earns a flat fee commission for referring product to an auction company.

Regroup
A process used in real estate auctions where a bidder has the opportunity to combine several parcels of land previously selected by other bidders, thereby creating one larger parcel out of several smaller parcels. This process is often used in conjunction with bidder's choice.

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

Sale Manager
The person designated by the auction company who is responsible for organizing the details of an auction. Also known as “project manager”.

Sealed Bid
A method of sale where by 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.

Subject to Confirmation
See "Reserve Auction"

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

Terms and Conditions
The printed rules of the auction and certain aspects of the Purchase & Sale Agreement that are read and/or distributed to potential bidders prior to an auction sale.

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

Trustee's Sale
A sale at auction by a trustee.

Uniform Commercial Code (UCC)
The UCC, first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all U.S. states.

Uniform Standards of Professional Appraisal Practice (USPAP)
USPAP can be considered the quality control standards applicable for real property, personal property, intangibles and business valuation appraisal analysis and reports in the U.S. and its territories. USPAP was first developed in the 1980s by a joint committee representing the major U.S. and Canadian appraisal organizations.

US Bureau of Alcohol, Tobacco, and Firearms (ATF)
A unique law enforcement agency of the U.S. Department of Justice that protects our communities from violent criminals, criminal organizations, the illegal use and trafficking of firearms, the illegal use and storage of explosives, acts of arson and bombings, acts of terrorism, and the illegal diversion of alcohol and tobacco products.

Withdrawal
Failure to reach the reserve price or insufficient bidding.

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.

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.

Minimum bids are routinely used at auctions to provide prospective buyers with an initial price range of where bidding will begin. If an auction has a “minimum bid” of $50,000, prospective bidders will know that the auction will start with an opening bid of $50,000 and that the asset will not sell for anything less than $50,000. Often times, auctions are advertised with an “opening bid”, but this should not be confused with a “minimum bid”. An “opening bid” simply means a price where the bidding opens.