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Jargon Buster - A guide to expressions used in the world of property auctions.


Actual Completion Date
The date when completion takes place or is treated as taking place for the purposes of financial calculations.

A change or changes in addition to original information in the auction catalogue. This may be a written notice as a supplement to the catalogue, or announced at the auction.

A public sale in which property or land, is sold to the highest bidder.

The person who performs an auction.  The auctioneer announces each lot which is being offered for sale, acknowledges bids, and confirms whether lots are sold or unsold and their final bid price.

Auction House
The Company operating the auction.

Auction Catalogue
The auction catalogue is prepared by the auction house for each auction.  It gives a description of the property, how to view it and states the General Conditions of Sale.

The offer made at the auction to buy the property at a specific price.

Bidding by Auctioneers
The auctioneer is able to take bids from:

·         People who are bidding by telephone

·         People who have instructed him by letter or fax to bid up to a certain sum on a lot

·         People who are not present but have made proxy bids

·         Himself/herself on behalf of the auction house or the vendor

The last example is known as bidding ‘off the wall’, a dummy bid, or a ghost bid.

Bid increment
The amount by which a new bid exceeds the previous bid.  The bid increment is usually £10,000, £5,000 or £1,000, depending upon the guide price and the interest in the room.  The auctioneer will reduce the bid increment when there are only a few bidders left bidding.  You can bid with a smaller bid increment – the auctioneer may or may not accept it.

Buyer’s premium
A fee paid by the successful bidder (the buyer) to the auction house.  The buyer’s premium is added to the hammer price.  It may be a fixed amount or a percentage of the winning bid and added on to it.  The auction house will state on their website and/or the auction catalogue if a buyer’s premium is required.  A buyer’s premium may be subject to VAT.  

After a successful bid there is a period of time (usually 28 days) before the sale must be finalised and all monies paid. If the sale is completed late, penalties will be charged which can include losing your deposit.  This is why it is important to arrange any financing you need before you bid at an auction. 

Exchanging contracts
If you make the last bid on a lot, then you are the successful bidder and you will have purchased the property.  The sale is binding on the fall of the hammer and you will then be asked to sign and exchange contracts in the auction room.

If you own the freehold, you own the property outright as opposed to leasehold where you own the rights to occupy the property for a specified period of time.

Full Structural Survey
A comprehensive report, describing the condition of building.

General Conditions of Sale
Conditions covering the sale of all properties at the auction house sale.  These will usually be found at the back of the auction catalogue.

Ground Rent
For leasehold properties only. The rent paid under the terms of a lease by the owner of a building to the owner of the land on which the property is built.

Guide price
The guide price, also known as the price guide, is provided by the auction house.  It gives an indication only of the price that the auction house expects the lot to sell for.  It is a guide only.  It is not the reserve price, or a professional valuation.  Purchasers must determine what the value of the property is to them, perhaps using independent or professional advice.

Hammer price
The price at which the lot sells for (the maximum bid), and which the successful bidder has to pay.  In addition to the hammer price, the successful bidder may also have to pay additional fees, buyers’ premiums, taxes, etc. that are applicable to that particular lot.

House/Flat Buyers Report and Valuation
A report that costs less and contains less detail than a Full Structural Survey.

In the room
A bid from someone attending the auction, and not by phone or internet.

See Bid Increment

Jump Bid
A bid that is made an a higher increment than the auctioneer has just asked for.

Legal Pack
The vendor's solicitor will put together a legal pack containing copies of all the legal papers that you and your solicitor will need to make an informed decision about the property or land you hope to purchase.  Where applicable, the pack should include copies of: title deeds, leases, searches, special conditions of sale, office copy entries, and replies to pre-contract enquiries.

You should obtain the legal pack before the auction day and check it out with your solicitor.  Bear in mind regardless of whether you have read, or not read, the legal pack, it will contain the terms of the contract and the conditions you are deemed to have agreed to when making a purchase.

If you buy a property that is leasehold, you own the rights to occupy the property for a specified period of time.  You should also expect to pay other ongoing costs like maintenance.  There may also be conditions or restrictions on what alterations can be made to the property.

Either a single item, or a group of items which are to be bid on and sold as one unit, as described in the auction catalogue.  Usually a single lot is one property or one piece of land, but a lot could also be multiple properties.  For example, “Lot 14 is three flats, flat numbers 4, 5, and 6, to be sold together as one lot.”

Memorandum of Contract
The Memorandum of Contract is a summary of the terms that the purchaser is bound by when the hammer falls, prior to the actual contract being signed.

Minimum Bid
The smallest opening (starting) bid that the auctioneer will accept.

No Reserve
(See Reserve)

Off the Wall
During the auction, if the bidding has become slow and is still below the reserve price, the auctioneer may take a bid “off the wall” on behalf of the vendor, as a way of trying to stimulate interest and move the bidding nearer the reserve price. Also known as a dummy bid, or ghost bid.  (See Bidding).

Opening Bid
The first bid made on a particular lot.

If you outbid someone, it means you were prepared to bid a higher amount than they were.

Paddle System
Some auction houses us a paddle system.  After arrival and registration prospective bidders are given a ‘paddle’ (which can be numbered) which identifies you.  You raise the paddle to place a bid.

Pre-Auction Sales
Selling the property prior to the auction actually taking place.

Price Guide
See Guide Price

Private Treaty
The sale of a property through negotiation of a price agreed between the seller and the buyer or their agents.

Proxy Bid
If you cannot attend the auction house on the day of the auction, you can ask the auctioneers to bid on your behalf.  You are required to complete an official proxy bidding form, prior to the auction and return it to the auction house with a deposit cheque within a specified time.  You confirm the maximum amount you wish to bid for the property and the auctioneer will bid up to, but not over this price.

The lowest price a vendor will accept at auction is called the Reserve Price.  This is confidential and agreed between the vendor and the auctioneer prior to auction day. The lot will be sold only when the bid price is equal to, or above, the reserve price.  If a lot is to be sold ‘without a reserve’, or ‘no reserve’, then any bid will be accepted by the vendor.

Special Conditions of Sale
Special Conditions of Sale relate to a specific lot.  They are in addition to the General Conditions of Sale, and relate to a particular property and are available upon request from the auctioneers or the vendor’s Solicitor prior to the auction.  Purchasers must read these Special Conditions of Sale, as they are legally bound by the conditions that will form part of the Memorandum of Contract.  They may contain restrictions, which you need to be aware of before bidding.

Telephone Bid
A member of staff from the auction house is present in the auction room and talks on the phone to a client who wishes to bid on a lot, but cannot be present.  They pass on the client’s bid to the auctioneer during the bidding.  (See Proxy bid)

A property being sold with someone living in the property who is paying rent, details of which are contained in the tenancy agreement signed by the tenant and the vendor.  A Tenancy agreement is a contract to live in or lease the property subject to the payment of rent.

Unsold Lots
If a lot fails to reach the reserve price at auction it is known as an Unsold Lot.  It is sometimes possible to negotiate a price to buy them after the auction.

Vacant Possession
If a property is sold with Vacant Possession, it is being sold without any occupants or tenants.

When a property is removed from the auction before the auction takes place.  Perhaps the vendor has sold the property via another method, or has decided not to auction the property.

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