Property auctions are becoming more and more popular, and are often an easier alternative than buying and selling property through other more traditional channels. However, the jargon attached to the auction sector can sometimes make it feel like a different world. So, to make the auction world seem more accessible, we at Austin Gray and Auction House Sussex have compiled a dictionary of common terms you might hear so you never feel like you’re hearing a foreign language again.
Addendum – An amendment or addition to the conditions of sale. This may be a written notice, in the catalogue, or announced at the auction itself.
Appraisal – An estimated value of a property determined by an independent auction house familiar with local property values.
Bridging loan – A short term loan when the prospective buyer needs funds to complete the purchase before selling their current property.
Bid – The exciting process of determining how much a property is worth on the auction day. Each prospective buyer will bid until they have reached their maximum and the property is sold or the reserve is not met.
Completion – The finalisation of the transaction where money is transferred between the two solicitors and the legal ownership of the property changes.
Conveyancing – The legal process of due diligence involved with the handover of property from one owner to another.
Deposit – A non-refundable deposit is paid upon exchange of contracts and used towards the balance of the purchase price. Usually the deposit is 10% of the agreed purchase price and is usually subject to a minimum value.
Exchange of contracts – The fall of the gavel creates a legally binding contract and an exchange of contracts. The physical exchange is carried out in the auction room with the buyer walking away with their completed copy. Completion and legal ownership follows shortly.
Fees – An administration fee is payable to the auctioneer at exchange of contracts.
Gavel – A small ceremonial mallet held by the auctioneer used as a symbol of the right to act officially. The fall of the gavel indicates that an item has been sold in an auction.
Gazumping – When the seller of a property accepts a higher purchase offer, having already accepted a lower offer from another potential buyer. This can happen, as the seller is not legally committed to the sale until contracts have exchanged. This will never happen when a property is sold at auction!
Gazundering – Lowering the amount of an offer to the seller, usually just before contracts are exchanged. Again, this will never happen when a property is sold at auction!
Guide price – A guide price gives a range that the auctioneers expect the property to sell within and what the seller is hoping to achieve.
General conditions of sale – The general conditions of sale are applicable to all auction properties and made available to all interested parties in the auction catalogue. They set out the terms of the sale and are only superseded by the Special Conditions.
Lot – Each individual property up for auction.
Legal Pack – Each property will have its own legal pack which is prepared by the sellers’ solicitor. It contains all the information you would expect to receive during a traditional sales process. The legal pack is published online and is free to download. It is advised prospective buyers consult their solicitors on the contents before bidding.
Multiple Agency – When several agents market the property and the one that sells it receives the commission. This is rare with auction sales although auctioneers do work jointly with local agents to help their client achieve their desired sale.
Private treaty – The more traditional method of sale whereby a buyer will agree to buy the property first then carry out their process of due diligence, before exchanging contracts and going on to completion.
Reserve price – This is the confidential minimum amount the property will need to reach during the bidding process before it can be sold. This is agreed prior to the auction between the seller and the auctioneer. If bidding ends before the reserve is reached, the property will not be sold. The reserve price is never set above the guide price.
Spotter – The spotter stands next to the auctioneer looking at parts of the room the auctioneer is not covering. The auctioneer may not look away from a bidder when he is in the process of ‘knocking down’ a property and relies on the spotter to identify any other bids in the room.
Special Conditions – Special conditions form an important part of the contract process. They are contained in the legal pack and set out any special conditions of sale which relate to the property and which are not covered by the general conditions of sale.
Valuation – Also referred to as a market appraisal. A detailed description of the current value of property, estimated by the auction house.
Austin Gray is an established, multi-disciplined firm that have been holding property auctions in Sussex for over 30 years. We have teamed up with the Auction House group to expand our coverage throughout Sussex and offer our clients national coverage when they decide to instruct us. For more information about our property auctions don’t hesitate to phone us on 01273 201980 or email us at firstname.lastname@example.org