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Vol. 1, No. 8
October 12, 2002

Auction Terms, Phrases, and Definitions
From the Staff of Automotive Mileposts

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AUCTION TERMS, PHRASES, AND THEIR DEFINITIONS

With more and more people using online auction services to buy and sell items, most people will eventually participate in this form of commerce at some point. And why not, when so many tempting things are available? They're much better than garage sales, as you don't have to get out and run all over town looking for the things you want. Online auctions don't have the familiar auctioneer standing at a podium in front, but there are still a great many similarities between the two.

Here's a listing of common terms and phrases used at auctions, and a short definition of what they mean. You will find some of the terms and phrases might have slightly different interpretations, depending on the specific policies of the auction company you're dealing with, so be sure you understand their specific terms before bidding.

Absolute Auction/Auction Without Reserve This is an auction where the item listed is sold to the highest qualified bidder, regardless of the value of the item. There are no limiting conditions, nor is there a reserve price set on the item, which means the seller hasn't specified a minimum bid price that must be met for the item to sell.

American Auction Normally used when a seller has multiple quantities of the same item for sale at the same price. Whoever bids the highest price for the largest number of items at auction close wins.

Auction Close/Close of Auction This is the predetermined time that the auction will end, established when the item was originally listed for sale.

Auction Listing Agreement/Listing Agreement Is a contract executed between the auctioneer (also known as auction company) and the seller, which authorizes the auctioneer to conduct the sale.

Auction Subject to Confirmation The seller has listed the item with a minimum (or reserve) price. If this minimum price isn't met, the item does not sell.

Auction With Reserve/Reserve Auction The seller has not only set a minimum price for the item, but has also reserved the right to accept or decline any and all bids. It is up to the seller to determine whether or not the minimum price is disclosed.

Auto Extension Allows the seller to automatically extend the auction closing time by an additional five minutes, if a bidder places a bid near the end of the auction.

Auto Resubmit Allows the seller to automatically resubmit the same item, with the same information and terms, if the item is not sold at auction close.

Bid Increments All bids placed must be greater than the Minimum Opening Bid if there isn't a high bid, and greater than the current high bid if someone else has already bid on the item. The amount of the increase depends on the current price of the item being auctioned.

Bid Retraction Takes place when a bidder cancels a bid placed on an item on an online auction. There are specific limits to what constitutes a legitimate bid retraction, and they vary by auctioneer. Make sure you understand these terms before you bid. Some auctions may not have a provision for bid retraction.

Bid Screening/Bid Shielding This procedure is normally performed by two bidders working together. One of them will place an extremely high bid for an item that the other bidder has already bid on earlier. By doing so, the lower bid is "protected" from other bidders.

Bid Siphoning Is a procedure where bidders who have placed bids on an online auction are contacted and offered the same item for sale as they have bid on. The result is that bidders are drawn away from the online auction. This is often done by competing parties in an attempt to disrupt the legitimate seller's auction.

Buy Price/Buy It Now This is the price that the seller has stipulated they are willing to sell the item for. When a bidder meets this price, the auction closes.

Deadbeat Bidder/Deadbeat Bidding Occurs when the winning high bidder of a closed auction fails to fulfill their obligation to buy the item.

Dutch Auction Is an auction in which the price of multiple identical items decrease by a fixed amount at a specified time. The bidding starts at a high price that progressively descends as bids are placed. Bids may be placed at any time during the auction, but any bid that is the first received after a price drop wins the right to purchase at the bid price.

Early Close Sellers may make the decision to close an auction early if they are satisfied with the current high bid price.

English Auction Allows a seller to secure the highest bid for an item by starting with the lowest acceptable price. The auction attracts progressively higher bids until the auction closes, or the bidding stops.

Escrow Service This third party is contracted to oversee and protect the interests of both buyer and seller after an auction closes. Normally, the buyer pays the escrow service all funds due for the auction item they won. The escrow service receives the funds from the buyer, and notifies the seller they are in possession of said funds. The funds are retained by the service until the buyer receives the item from the seller. Upon notification that the item has been delivered, the service then forwards the funds to the seller. The escrow service normally charges a fee for this service.

Feedback Is the process of recapping your auction experience with a particular buyer or seller, regarding a specific auction item. You normally indicate whether the outcome was positive or negative, with a brief synopsis of why. Dealing only with buyers and sellers with multiple positives listed in their feedback profile minimizes your risk of having a bad experience. This does not in any way guarantee satisfaction, but it indicates a past history for that individual.

Full-Quantity-Only Bid This type of auction stipulates that the bidder must bid for the entire quantity of the item being auctioned.

Insertion Fee Is the cost to the seller to list an item for auction. This fee is normally a percentage of the minimum opening bid, or it can be based on the reserve price or final high bid price. This fee varies greatly with the different auctioneers.

Maximum Bid/Proxy Bidding/Bidding by Proxy This is the highest price a bidder will pay for an item. This bid is submitted to the auctioneer in confidence, and the auctioneer electronically bids on behalf of the bidder in increments up to the maximum bid. Bidding stops when the maximum bid is reached, or the auction closes. If the closing price is less than the maximum bid, that is the price the bidder pays. In a case where identical proxy bids are placed, whichever bid was placed first is given priority.

Minimum Bid Auction Stipulates that the auctioneer will only accept bids at or above a predetermined price.

Minimum Opening Bid Is the amount stipulated that must be bid in order to start bidding for a particular item.

No-Sale Fee Is a fee paid by the seller to the auctioneer if their item listed did not sell in a reserve auction.

NR Is an abbreviation for "No Reserve". This indicates that the item listed does not specify a reserve price.

Parcel Bidding The auctioneer accepts bids on individual items within a group of items listed at auction. The group of items is normally referred to at auctions as a "lot".

Partial-Quantity Bid Allows the bidder to stipulate that they are willing to accept less than the quantity they originally placed a bid for.

Private Auction Allows a group of bidders to bid on an auction that is not available for public bidding. A Private Auction can also be any public auction that conceals the identity of all bidders who have placed bids.

Proxy Bidding See Maximum Bid/Proxy Bidding/Bidding by Proxy above.

Reserve Pricing A minimum price is established by auction administrators or seller representatives to protect the value of their inventory and investments.

Reverse Auction Allows buyers to post items they would like to buy, and affords sellers the opportunity to offer items to the buyer at the best price.

Sealed-Bid Auction/Silent Auction Conceals bidders and amounts bid until after auction closes. Buyers may submit any number of bids for any quantity of items up until the close of the auction. The winner is announced after all bids have been opened.

Shill Bidder/Shilling Identifies fraudulent bidding by the seller of the item, usually under a pseudonym or with the aid of an accomplice to artificially inflate the bidding price for an item.

Second Option/Lowest Price Option/Vickery Option In auctions where the bids progressively rise, the second or lowest price options allow the winning price to be determined. Auction items are awarded to the highest bidders at a price equal to the second-highest legitimate bid, or the lowest winning bid.

Starting Price/Opening Bid Specifies the amount at which bidding will start. Bids lower than this amount will not be accepted, and bidding will not commence until this price is met.

Straight Auction This is the most common type of auction seen online. There is no reserve price set, and only one item is up for sale. The seller specifies the starting price/opening bid, and the seller understands that the item is sold for whatever the final bid amount is at auction close.

Yankee Auction Similar to a Dutch Auction, in which a seller lists multiple items for sale. The items must still be identical, but unlike Dutch Auctions, at the close of the auction each winning bidder pays their exact high bid.

It is important to remember that online auctions can be addictive, and in some cases the same item is available through other sources for less money. Do your homework before you bid, make sure you understand the policies of the auction site you intend to bid on, and make sure the seller's terms are acceptable to you. A bid is a legally binding agreement, in which both the buyer and seller are obligated to fulfill, so do not bid without regard for your responsibilities if you are the winner.

To learn more about online auctions, visit our Classic Car Parts Auctions - Keyword Search page, eBay Registration page, or read the help pages at eBay.com and bid in confidence!

Copyright © 2002 Automotive Mileposts, Inc.
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