Must-Know Lingo Before You Bid In Your First Industrial Auction

For commercial and industrial buyers, auctions are a great way to secure great deals on used equipment, parts, and machinery. When you’re watching your bottom line, industrial auctions can help you stretch your capital equipment budget.  With technology today, you can participate in auctions via the Internet, such as on industrial liquidation marketplaces like Aucto.

Knowing some standard auction and liquidation terms and definitions will help you succeed in online marketplaces.  If you’ve never participated in an online auction, don’t worry. Many auction websites and companies offer assistance and guides.  Before you start bidding, here are some key terms and phrases used in auctions. By familiarizing yourself with these terms and definitions, you can bid with confidence and purchase what you need at the right price.

Auction Terms and Definitions

Absentee Bids

Bidding in an auction without being present at the time the lot expires. The method of submitting bids varies by auctioneer and auction house. In an online auction, you can enter your maximum bid and the system will bid on your behalf up to your maximum amount. –

Absolute Auction 

The highest bidder wins the item, with no limit or minimum prices set.

Ask Price

After a buyer places a bid, the auctioneer will offer it to other buyers at a higher amount or the ask price.

Appraisal

The process of examining an item to find its value. This may be written or oral, and done by an expert who analyzes current market trends and other relevant information.

As-is

The selling of an item without guarantees to the fitness or functionality of the item.

Bid

An offer to purchase the item at the ask price.

Bidder Acknowledgement

Also known as a memorandum, it is a document signed by parties in the contract room or auction floor. For online auctions, potential Bidders must agree to the Terms and Conditions posted by the Seller prior to being allowed to participate in the auction.

Bid Price

The most current and highest bid.

Buyer’s Premium

A pre-specified amount the buyer must pay on top of the final bid, usually to cover administrative costs. This may be a percentage of the bid amount or a flat fee, but must always be disclosed before the auction starts.

Catalog

A published list that itemizes and describes all the items on sale at an auction.

Earnest Money Deposit

An amount paid by the Bidder in advance of the auction. This is usually a set amount given to the auction house to prove the buyer’s genuine interest in bidding. The winner will have his or her deposit applied to the final price and all other bidders will have their money refunded.

Lot End Time

The time at which the lot expires and a winner is determined.

Lot Number

 A unique number that identifies each lot being sold at an auction.

Market Value

The highest possible price that an item may fetch in an open market. This assumes a fair sale and excludes outside and undue stimulus.

Starting Bid

The initial ask price of a lot. The amount at which the bidding starts for a particular lot.

Private Auction

An auction that is invite-only.

Reserved Auction

An auction where the sellers set a minimum price (reserve price) that the bidding must reach. If the reserve price is not met, the seller may refuse to accept the highest bid.

Terms and Conditions

The rules and regulations that govern any auction.

Timed Bidding

Some online auctions may utilize a timed bidding component. With timed bidding, the End Time of the lot is extended by a pre-determined amount of time if a bid is placed within the last few minutes. If no additional bids are placed, the lot expires, and the highest bidder is awarded the lot.