Understanding auction-speakPosted on Wednesday, September 18 2013 at 3:37 PM
Auction lingo is confusing potential buyers and putting them at a disadvantage, according to one buyers’ agent.
Patrick Bright of EPS Property Search says buyers need to recognise the terminology used by auctioneers to understand the auction’s progress.
“Like many professions, real estate has its own language and terminology that is often intimidating and confusing to outsiders.”
Bright says the terminology is designed to elicit a response from potential buyers, but if they read between the lines, they can use auctioneering terms to keep track of the sale.
“At an auction, the auctioneer wants to run the bidding up as fast as possible, taking big rises and using their bags of tricks, jargon and one-liners to maintain the bidding momentum.
“If you don’t understand the environment or the language being used, then it can be quite intimidating.”
Trevor Matthews, an agent and auctioneer with Matthews Real Estate, says he’s seen buyers go into auctions unprepared for what was about to happen.
“I think it’s just some people are totally unfamiliar with auctions and have no idea. There can be difficulties for people who have trouble with normal colloquialisms, let alone auction lingo.
“I’ve announced a reserve price has been reached at an auction and then had someone a few minutes later ask, ‘Has the reserve been reached?’ after I’ve already announced it.”
Matthews says the auction process is now fairly transparent.
Auctioneers will announce they’re seeking the vendor’s advice when the bidding hasn’t reached the reserve, or make it clear when they’re bidding on behalf of the vendor.
He also says auctioneers won’t generally accept small bid increments when they’re well below the expected reserve.
“The only time I’m interested in $1000s or $500s is when the reserve has been reached.”
Matthews says buyers should attend a few auctions to see how they run before they bid on their preferred property.
EPS Property Search compiled a list of common auction terminology and how best to interpret it during the sale.
“I’ll only take rises of $50,000 or more” means the bidding is a long way short of the reserve price.
“First call! Second call!” If this is said before the reserve is met then the auctioneer is attempting to get another bid by provoking the fear that you’ll miss out if you don’t bid now even though the property isn’t yet on the market. Once it’s been announced that the reserve has been met it means if you don’t bid now then it’s very likely that you’ll miss out!
“I’ll refer the bid” This is when bidding has stalled below the reserve and the auctioneer needs to talk to the selling agent to apply pressure to the vendor to lower the reserve price in the hope of making a sale under the hammer.
“I am selling” or “we’re playing for keeps” means the property is on the market and the highest bidder at the fall of the hammer will become the buyer of the property.
“I’m making a vendor bid of....” This is used if no one will make an opening bid or if the auction has stalled and the bidding is a long way from the reserve. The auctioneer makes a bid on behalf of the vendor to kick-start the bidding.
“I’m confident it will be sold under the hammer.” It can be just a one liner, however it usually means the selling agent has received decent pre-auction offers from buyers who are at the auction, or the auctioneer has been advised by the selling agent that it’s a really low reserve.
“Last opportunity” The auctioneer is about to pass the property in so bid now if you want it. Or, if it has passed the reserve, it means that the property is about to be sold to the highest bidder.
“I’m happy to take rises of $500” The bidding is close to the reserve or the property is about to be sold and the auctioneer is milking the bidders for a bit more.
“There’s real value here today buyers” The auctioneer is trying to encourage bids when none are forthcoming.
“We think it’s worth more” The selling agent has over-quoted to the vendor to get the listing, or the bidding is a long way from the reserve or a combination of both.
“We’re selling today!” Typically an attempt to get you to bid when the reserve hasn’t been met, but not all the time. If you hear that phrase always ask ‘has the reserve been met?’ as some auctioneers use that term once the reserve has been met but most will beforehand. Your chance of bidding against a dummy bidder is high prior to the reserve being met and the property being called “on the market”. In 99 per cent of situations you’re better off not bidding until the reserve has been met.
Read more:
http://www.apimagazine.com.au/api-online/news/2013/09/understanding-auction-speak 
