Auction FAQ
I want to go to an auction. What should I know?
Understand the type of auction you are participating in (with reserve, without reserve) and make sure to review the complete terms and conditions of the sale. It is preferable if you register for the auction prior to auction day, although you may be able to register on that day depending on the auction house. You should be aware of the items you wish to buy, inspect them in person if possible, and set your bidding strategy (how far you’re willing to spend, etc) before the auction starts.
You will be bidding against others and this is a business transaction, so the expectation is that you have the financial capacity to purchase any lots you are bidding on. A contract is formed upon the fall of the auctioneer’s hammer and you should be prepared to pay for any lots you have won at that time, although see the individual auction house’s terms for when they expect payment. You generally are expected to take or arrange shipping for any items you may purchase.
If you are attending an auction with a live element, you will want to bid in sync with the chant. You should be listening closely and following the increasing bids. The numbers the auctioneer is repeating is where the bid is now and what the auctioneer is accepting next. Remember, under Maine law, if you are the high bidder when the hammer falls, you become the owner of the item and the sale cannot be undone.
For a more complete discussion on what you need to know to attend an auction, please see our Buyer’s Guide to Auctions.
Can I attend an auction as a spectator without bidding?
Most auctions are open to the public free of charge. Generally, people are encouraged to attend as spectators as the auction houses always want to attract new customers. There is no better way to learn about auctions than to watch one firsthand. And you may be quite entertained!
PLEASE NOTE: DUE TO THE PANDEMIC, YOU SHOULD CALL AHEAD TO CHECK TO SEE IF THE AUCTION YOU WANT TO ATTEND HAS A LIVE ELEMENT. OUT OF CAUTION, SOME AUCTIONS MAY BE ONLINE OR REMOTE ONLY.
What is the auctioneer saying?
The art of perfecting the auctioneer’s cry takes years of practice, but understanding what the auctioneer is saying is simple. The auctioneer’s bid call can be broken into two parts:
When the auctioneer receives the next bid, it becomes the current bid and the next increment becomes the next bid.
Example: “I have $5, would you bid $10, would you bid $10? Now $10, I have $10, would you bid $15…”
The cadence and repetition of words and use of “filler words” vary from one auctioneer to another, but the format is usually the same. Always remember that the number the auctioneer keeps repeating most often is the dollar amount they want next.
If I scratch my nose or wave at a friend, will the auctioneer think I’m bidding?
We hear this misconception a lot! In fact, to bid at an auction or for your bid to be received by the auctioneer, you will need to be registered and have a bid card or paddle. You will receive this bid card at registration and it will have a number on it. This number allows us to know who is bidding from the list of registered bidders.
If you mistakenly bid or the auctioneer misinterprets your movement as a bid, immediately notify either the auctioneer or auction staff.
Am I required to have cash on hand at the auction?
Each Auction House has their own policy regarding payment. Cash payment is almost always accepted, and check to see if the Auction House accepts other forms of payment such as cash, check or credit card. You should ensure that the Auction House accepts your preferred means of payment before you bid.
What are the differences between a “with reserve” and a “without reserve” auction?
A “with reserve” or “reserve” auction is an auction in which a minimum price has been preset by the seller that must be met to complete the sale of an item. Reserves are often used to provide the seller with security that they receive a certain amount of money to meet their sales goal. If the reserve is not met, even if there are lower bids, the item will not sell.
A “without reserve” auction, or “absolute” auction, is an auction in which there is no minimum price and the item goes to the highest bidder regardless of price. If there is only one bidder and they bid one dollar, regardless of what is being auctioned, the piece sells for one dollar.
A buyer’s premium is an amount over the hammer price that the buyer pays as payment to the auction house for the privilege to be allowed to participate in the auction. This is partly how the auction house is compensated for holding the auction. The premium is based upon a percentage of the hammer price of the item and is added to the hammer price to make the purchase price.
What does “as is, where is” mean?
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 property being sold. It is important that you inspect the property you are interested in before you bid.
Photos may not show all the details or potential faults with the property 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 the hammer falls at auction, under state law you are the new owner.
Can I inspect the property I am interested in bidding on before the auction?
It is the buyer’s responsibility to conduct due diligence prior to bidding, so there should be ample opportunity to view and inspect the item before the auction. You should inquire about any questions you may have on a property and what hours or preview times are available for you to inspect the property. You should always feel free to ask questions about any lot advertised for sale at an auction.
What are low and high estimates?
The high and low estimates given for an item are solely a guideline as to the item’s apparent market value, based upon the auctioneer’s approximation as to the range within which the property may be sold for at auction. An estimate is not a statement of value or selling price of an item, which will be determined by the market as represented by the open and competitive bidding that an auction affords. Generally, if there is a reserve, it will be at or below the low estimate.
To be exempt from sales tax and you are from Maine, you need to present the auctioneer with a valid, signed Maine resale certificate. If you are from out-of-state and having the items shipped to you, you may be exempt from Maine sales tax but still might be on the hook for the sales tax assessed in your state. States are cracking down on this since the Supreme Court state in 2018 in the case South Dakota v. Wayfair that internet sales are subject to the sales tax of the buyer’s state.
A condition report is a statement from the auctioneer as to the physical condition of an item and any other issues that may be present. While we take every measure to be as accurate as possible, a condition report is no substitute for a physical inspection of the item by the buyer prior to the auction. It is the buyer’s responsibility to perform due diligence and inspect the item prior to sale, and a condition report from the auctioneer does not substitute for that.
Depending on what the appraisal is for, there may be a fee. Auctioneers will generally provide an auction estimate, which tends to be fairly accurate as to market value, for free. However, if an appraisal is for tax, insurance or estate valuation purposes, there may be a fee as these appraisals require a certified appraiser who is liable for their opinion, and provide appraisals for a living.
I am interested in bidding in an auction. What should I do?
Contact the auction house whose auction you are interested in attending and they will be happy to inform you of their bidder registration procedures. These often can be found on the auction house’s website, and if they are using an online website to hold their auction, on the website.
What is an absentee or phone bidder?
Absentee and telephone bidders are bidders who participate in an auction but are not physically present. Absentee bidders inform the auctioneer ahead of time the maximum amount they are willing to spend on a lot and a clerk of the auctioneer bids for them. A telephone bidder arranges to have a clerk of the auctioneer who is present call them, and the clerk bids on the lot based upon the instructions the bidder gives the clerk real time over the telephone.
If I buy an item at the auction, how do I get it?
Each auction house has different procedures for payment and pick-up, so you should check with that particular auctioneer before the sale. Many auction houses also provide or will help arrange shipping.
I want to sell some property at auction. How do I do that?
You should find an auctioneer who is near you, deals with the type of property you have to sell, or otherwise meets your particular needs and requirements. The Maine Auctioneers Association website lists all of its members, their locations and specialties. Feel free to shop around and contact several who may be suitable. Once you identify the auctioneer you are interested in, they would be happy to shepherd you through the process. See also our Seller’s Guide to Auctions for a more in-depth discussion of finding an auctioneer and selling your property at auction.
Glossary of Terms
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A
ABSENTEE BID
A procedure that allows a person to bid without being physically present. A bidder submits an offer on an item prior to the auction by filling out an absentee bidding form or by placing a pre-bid online The bidder indicates which items the bidder wants to bid on and the highest amount, or cut-off, that the bidder is willing to go. An auction staff member or computer clerk will bid for that item on behalf of the bidder up to the cut-off amount. Also known as a left bid, pre-bid or proxy bid.
ABSENTEE BIDDER
A person who submits an absentee bid, see “Absentee Bid.”
ABSOLUTE AUCTION
See “Without Reserve”
AFTER-SALE OFFER
An offer made after the auction is over on an item that did not sell. See also “Post-Auction Sale.”
APPRAISAL
A written or oral statement of the market value of an item. It is independently, objectively and impartially prepared by a certified appraiser in accordance with generally accepted appraisal standards setting forth an opinion of defined value of an adequately described asset, as of a specific date. Appraisals are supported by the presentation and analysis of relevant market information and based generally upon prices on comparable assets in the same condition and context as the asset being appraised. Often used for insurance, tax or estate distribution purposes. Not to be confused with an estimate.
AS IS
Selling the property in its present condition 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” or “In its Present Condition.”
AUCTION
A method of selling property, often separated into items or lots sold in sequence, 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 that item at auction.
AUCTION HOUSE
A business that conducts auctions. In Maine, only individuals can be licensed, so every auction house has at least one licensed auctioneer who conducts or is responsible for their auctions. Often used interchangeably with “Auctioneer.”
AUCTIONEER
The person who the seller engages to direct, conduct, or be responsible for a sale by auction. “Auctioneer” can mean the auction house in general or specifically the person who actually calls or “cries” the auction. The auctioneer is the representative of the seller and acts as seller’s agent, while the contract for sale is between the buyer (winning bidder) and the seller. In Maine, the auctioneer is required to be licensed by the state and is legally responsible for the conduct of the sale. See also “Auction House.”
B
BID
A prospective buyer’s indication or offer to an auctioneer of a price they are willing to pay to purchase property at auction, usually performed by raising their bid card or other method that gets the auctioneer’s attention. Bids are usually in standardized increments established by the auctioneer.
An assistant to the auctioneer in looking for bids and managing the audience, and can include a ringman who is a professional staff member trained to perform the function or a volunteer who merely looks for bids on behalf of the auctioneer. See “Ringman” and “Spotter.”
BID INCREMENT
The amount by which the auctioneer increases the bidding price at each bid interval, beginning with the bid following the opening bid. The amount of the bid increments tend to increase as the amount being bid gets larger, and the auctioneer may refuse to accept a bid that is outside of that increment. It is generally acceptable, though, to bid a half or even quarter of an increment, as it is relatively easy math for the auctioneer to calculate at auction speed and furthers to advance the bidding.
BIDDER
A person who registers to bid and/or bids at an auction.
BOUGHT-IN
A phrase used to indicate an item failed to sell at auction due to no bids being placed or reaching the reserve and remains the property of the seller. See also “Pass”
BUY-IN RATE
The percentage of items in an auction sale that failed to sell. See also “Sell Through Rate”
BUYER
A bidder who was the highest bidder upon the completion of sale of an item.
BUYER’S PREMIUM
A percentage of the hammer price that is paid by the buyer which is added to the hammer price and is realized by the auctioneer as compensation for conducting the auction. For instance, if the buyer’s premium is 20% and a bidder wins a lot at a $100 hammer price, the purchase price would be $120 ($100 hammer price plus $20 (20%) buyer’s premium)
C
CATALOG OR BROCHURE
A publication or online list advertising and describing the items available for sale at public auction in lot order, often including photographs, name of artists, mediums, property descriptions, condition reports, estimates of value and the terms and conditions of the sale.
CATALOGUE RAISONNÉ
A catalogue assembling all or a selected portion of an artist’s work for reference or research by third parties.
CATALOGUING
The process by which an auctioneer organizes and assembles information regarding each lot or item of a prospective auction sale, including a description of the item, quantity, maker or artist, title, medium or composition, size, condition, dimensions, marks or signatures, provenance, damage, repairs or restoration and any other information relevant to the value or marketability of the item.
CERTIFICATE OF AUTHENTICITY
Also called a COA, a document provided by the artist, estate or administrator of the collection of the artist certifying the authenticity of a piece of work by the artist, and may include information such as the artist’s signature, or the technique, medium or other aspect of the work that may be relevant.
CHANDELIER BID
Also called a “phantom bid,” a pretend bid by the auctioneer to move the bidding on an item that hasn’t yet met the reserve or when the bidding is sluggish. It is called a chandelier bid because the auctioneer is supposedly looking at the chandelier while pretending to be accepting a bid from a bidder, although the auctioneer may point or otherwise gesture to a point in the room pretending to be acknowledging a nonexistent bidder. This process is not illegal if the auction is a reserve auction and the reserve has not yet been met, or in any auction if there are no bids received on an item, but is not generally thought well of and is not encouraged.
COLLUSION
Is an illegal agreement between bidders or sellers that unfairly affects the outcome of an auction. Collusion can happen when two or more otherwise interested bidders agree to a strategy of not bidding against each other in order to suppress the price of certain lots at a low level. Collusion can also occur between a seller and an auctioneer in using a shill to make fake bids above the reserve to inflate or artificially push up the sales price of an item.
COMMISSION
See “Seller’s Commission”
COMPLETION OF SALE
The acceptance of the final bid for an item by the auctioneer indicated by the fall of the auctioneer’s hammer or gavel. Maine Law and the Uniform Commercial Code consider the auctioning of each lot to be a separate and distinct sale creating a contract between buyer (winning bidder) and seller.
CONDITION REPORT
A statement made by the auctioneer describing the physical condition of an item as well as any other condition of interest or that may affect the item’s value. The condition report is not a substitute for the buyer’s responsibility to conduct due diligence to research and inspect an item prior to bidding.
CONDITIONS OF SALE
The legal terms that govern the conduct of an auction, including acceptable methods of payment, buyer’s premiums, possession, reserves, registration requirements 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. The State of Maine requires published conditions of sale for every auction held in the State. Also known as “Terms & Conditions.”
CONSERVATION
The process by which an item is repaired, restored, cleaned or otherwise treated by an expert, often called a conservator, to return an item as much as possible to its original condition and to increase the appearance, value or marketability of an item.
CONSIGNOR
See “Seller”
CONSIGNMENT AGREEMENT
A contract executed by the auctioneer and the seller (consignor) which authorizes the auctioneer to sell at auction property owned by the seller and sets out the terms of the sale, the commission due the auction house from the seller, other charges including buyer’s premium, the payment schedule and the rights and responsibilities of each party. Maine State law requires a consignment agreement between the auctioneer and seller.
COVER LOT
An item in an auction that is presented on the cover of the catalog or other promotional material advertising the auction. Often a coveted position, the auctioneer chooses the cover lot, often one of the best or most valuable items in the auction, to create the most interest or excitement among prospective bidders.
CURATE
The process of organizing, overseeing, describing, interpreting or carefully selecting items to be included in an auction sale, based upon value, theme, quality or other factor defining or limiting the scope of the auction.
CURATOR
The person who curates or has overall responsibility for the curation of an auction.
D-F
DUE DILIGENCE
The process of gathering information about the condition and legal status of an item. Due diligence is the sole responsibility of the bidder/buyer.
ESTATE
The body or group of property left by a person upon the person’s death.
ESTATE SALE
The sale of the estate or property left by a person upon the person’s death.
ESTIMATE
A price range from low to high at which an item is expected to sell at auction, which is published in the catalogue or auction listing with other information about the item. Estimates are not price tags nor guarantees of value, rather the auctioneer’s best approximation of an item’s auction value based upon market research, condition, provenance and expertise of the auctioneer, to be used as guidelines by the buyer and often for the reserve set by the seller. Not to be confused with an appraisal.
FAIR MARKET VALUE
The term is used to denote the probable value of an item that a generic buyer would pay a generic seller if the item is sold on the open market and with each acting reasonably and prudently and under no undue stimulus. Well-advertised auctions are considered appropriate means to determine fair market value as the bidding at auctions is open and competitive. Appraisers attempt to determine fair market value through research, comparing like sales of like items, etc. when conducting an appraisal on an item.
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GAVEL
Another name for the hammer that an auctioneer knocks down to denote the close of the bidding on an item.
GUARANTEE
A pre-auction commitment made by an auctioneer or third party to purchase an item if bidding on the item fails to meet a certain amount at auction. Guarantees are becoming more common due to competition between auctioneers to lure choice consignors and consignments to their auctions, as a guarantee provides some measure of certainty for the consignor. Guaranteed items are often denoted as such with a symbol or other marking next to the item in the auction catalog.
HAMMER PRICE
The amount of the final bid of a lot accepted by the auctioneer, which is signaled by the auctioneer with the fall of the hammer or other announcement of the completion of sale on that lot.
INSURANCE VALUE
The value given for an item representing its replacement cost if it is irreparably damages, lost, stolen or destroyed. The insurance value is generally higher than its auction value.
ITEM
One piece of property or multiple pieces grouped as one piece of property for sale as one lot in an auction.
KNOCKED DOWN
The term used to denote an item has been sold at auction by the fall of the auctioneer’s hammer.
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LIVE AUCTION
An auction held in real time in which live bidding is conducted real-time with bidders physically present at the auction. A live auction may also have bidders on the telephone and by absentee or simulcast to bidders online.
LOT
An item or group of items sold as one in an auction, usually assigned a number to identify it and indicating its order of sequence in the auction. The sale of each lot is considered its own unique and separate sale binding the seller and buyer in contract pursuant to Maine law and the Uniform Commercial Code.
MARK
An inscription, engraving or other writing by an artist, maker or manufacturer on a piece of work that may include the artist’s signature, date, symbol, title of piece, location or other information. A mark may be on the front, back, top, bottom, frame, stretcher bar or other part of the piece.
MARKET VALUE
See “Fair Market Value”
MEDIUM
The material used to create a piece of art, or that the piece of art is made out of, including oil on canvas, watercolor on paper, wood, bronze, etc.
NO RESERVE
See “Without Reserve”
ONLINE AUCTION
An auction held solely online with no bidders physically present and which may be conducted real time or in a timed format.
OPENING BID
The first bid offered by a bidder or by the auctioneer to begin bidding on an item or lot at an auction.
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PADDLE
A card or sign on a stick or handle that displays a bid number that the bidder uses to bid by raising the paddle to get the auctioneer’s attention. If the bidder wins the item, the auctioneer will ask for the number on the paddle, which is recorded in the auction’s records as the winner for that item.
PASS
This is the action an auctioneer takes when an item fails to receive a bid or the bidding does not reach the reserve price. When the auctioneer passes on an item, the bidding is closed with the item not sold and the auctioneer moves on to the next lot. See also “Bought In.”
PRE-BIDDING
Leaving a pre-auction bid, often on an online auction website. See also “Absentee Bid”
PREMIUM
See “Buyer’s Premium.”
PREVIEW
The specified date and time prior to the auction when items are available for viewing and inspection by prospective buyers. Also known as “Open House,” “Inspection” or “Pre-sale inspection”
PRIMARY MARKET
The market in which an object is sold for the first time, oftentimes directly from an artist or a gallery and in which the sales price is set by the seller. Also known as “Retail”
PROVENANCE
The record of history of ownership of an item from its creation to the sale. Provenance can be important in establishing authenticity or value of an item.
PURCHASE PRICE
The total amount for an item owed by the buyer that includes the hammer price and buyer’s premium and which may be subject to sales tax, if applicable.
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REGISTRATION
The act of registering to bid in an auction, in which the bidder is assigned a bidder number and agrees to abide by the terms and conditions of the auction.
RESERVE/RESERVE PRICE
The minimum bid price for an item in a reserve auction under which the seller may refuse a sale of that item. The reserve is generally not public knowledge but known only to the seller and auctioneer.
RINGMAN
A professional helper or staff member of the auctioneer on the floor who often covers a section of the audience keeping an eye out for and tracking bids and providing information to bidders and the auctioneer alike. Effective ringmen can make a substantial difference in hammer price and are often indispensable at auctions that are too loud or large for the auctioneer to effectively see or hear all of the bidders. Not to be confused with a “Spotter.”
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SECONDARY MARKET
The market in which objects are resold having been already sold at least once, often through an auction house and in which the sales price is determined by the market in open and competitive bidding.
SELLER
The person or entity that has legal possession and ownership of any interests, benefits or rights inherent to an item with the authority to sell the item and who enters a consignment agreement with the auctioneer that authorizes the auctioneer to sell the item on the seller’s behalf. Also known as ”Consignor”
SELLER’S COMMISSION
The fee is based upon the percentage of the hammer price that the auctioneer charges the seller as compensation for conducting the auction sale, under Maine law established by contract (consignment agreement) prior to the auction.
SELL-THROUGH RATE
The percentage of items that have sold in an auction. Generally, 80% or better is considered a good sell-through rate.
SETTLEMENT STATEMENT
The accounting an auctioneer gives a seller after an auction listing the lots sold, prices realized and the amount due seller after all fees and commissions are deducted.
SIMULCAST AUCTION
A live auction which is simultaneously broadcasted remotely through the internet or other means and in which live bidders and remote online bidders both participate.
SPOTTER
An often untrained person or volunteer who looks for bids on behalf of the auctioneer. Not to be confused with a “Ringman.”
STARTING PRICE
The price at which the bidding starts on an item, ordinarily set by an opening bid by a bidder or by the auctioneer.
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TELEPHONE BID
A bid given over the telephone by a bidder who is not physically present at an auction, relayed to a clerk or staff member of the auctioneer who is physically present at the auction and who bids on the telephone bidder’s behalf. Telephone bidding is for the convenience of bidders who are unable to attend the auction but still want to participate or those who wish to retain anonymity.
TERMS & CONDITIONS
See “Conditions of Sale”
TIE BIDS
When two or more bidders bid exactly the same amount at the same time. This must be resolved by the auctioneer, with the bid made first given priority. For true tie bids in which both were given simultaneously, the auctioneer has the discretion in choosing the winning bidder.
TIMED AUCTION
An online auction conducted over a period of time where bids are accepted throughout the period and tabulated after the period expires. Some timed auctions allow items to be purchased immediately by paying an amount higher than the present highest bid or some other predetermined amount.
U-W
UNDER BIDDER
A bidder who bids on an item but does not win it.
VALUATION
The process of determining the value of an item, either by an auctioneer in evaluating possible consignments for auction or determining the item’s auction estimate, or by an appraiser in providing a certified opinion of the item’s value for estate distribution, tax or insurance purposes. See also “Appraisal” and “Estimate.”
WITHDRAWAL
The right of the seller to terminate a sale at any time during a reserve auction prior to reaching the reserve price.
WITH RESERVE
An auction where the seller has the right to establish a minimum reserve price, to accept or reject any bid and to withdraw the property at any time prior to the completion of sale. See also “Reserve.”
WITHOUT RESERVE
An auction where there is no minimum opening bid or other condition that limits the sale to the highest bidder and, once bidding is opened, where the seller may not modify or nullify the sale by bidding either personally or through a representative or by withdrawing the item. Also known as an “Absolute Auction.”