Auction / Auctioneer Definitions, Terms & Terminology

Updated: Oct 8

(Adopted from the National Auctioneers Association (NAA)). Reference Material & Definitions incorporated, as applicable, in Marine Appraisals & Marine Survey Reports, prepared by Karatzas Marine Advisors & Co. & Karatzas Auctions Documentation



Absentee Bid: A procedure that allows a bidder to participate in the bidding process without being physically present. Generally, a bidder submits an offer on an item prior to the auction. Absentee bids are usually handled under an established set of guidelines by the auctioneer or auction company. The particular rules and procedures of absentee bids are unique to each auction company. Absentee Bidder: A person (or entity) that is not present at the auction but submits, in advance, a written or oral bid that is the top price they will pay for a given asset. Absolute Auction: An auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an “auction without reserve.” Accounting of Sale: A report issued to the seller by the auctioneer or auction company detailing the financial aspects of the auction. Accredited Auctioneer Real Estate (AARE): The professional designation awarded by the NAA Education Institute to qualified real estate auctioneers who meet the educational and experiential requirements of the Institute and who adhere to a strict code of ethics and standards of practice. Agent: A person who acts on behalf of another individual or entity. American Bankruptcy Institute (ABI): The American Bankruptcy Institute is the largest multi-disciplinary, non-partisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. America Society of Appraisers (ASA): The American Society of Appraisers is an international organization of appraisal professionals and others interested in the appraisal profession. ASA is the oldest and only major appraisal organization representing all of the disciplines of appraisal specialists. [Karatzas Marine Advisors & Co employs ASA accredited professionals.] Appraisal: A written or oral statement, independently objectively and impartially prepared by a qualified appraiser (holding the Accredited Senior Appraiser (ASA) accreditation), prepared in accordance with generally accepted appraisal standards, setting forth an opinion of defined value of an adequately described asset, as of a specific date, supported by the presentation and analysis of relevant market information. Appraisal Foundation, The: A not-for-profit organization dedicated to the advancement of professional valuation, established by the appraisal profession in the U.S. in 1987. Since its inception, the Foundation has worked to foster professionalism in appraising. It is authorized by Congress as the source of appraisal standards and appraiser qualifications. Apprentice Auctioneer: An auctioneer who is in training, operating under the supervision of a licensed or experienced auctioneer. As is: Selling the property 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" and "In its Present Condition." A method of selling property in a public forum through open and competitive bidding. Also known as “public auction” or “auction sale.” Auction: A method of selling property in a public forum through open and competitive bidding. Also known as “public auction” or “auction sale.” Auctions are seen as a potentially efficient mechanism for the sale and purchase of goods. They are used for a variety of goods, but, in particular for rare expensive goods, which are hard to price. Auctions have also been made much easier with the advent of the internet which makes possible online bidding.


Auction (Types)—Under the Auction Theory, there are four types of auctions that extensively have been researched and analyzed::


a) the Ascending-bid Auction (commonly known as English Auction, and also called the Open Cry Auction, or Oral Auction, or English Auction),


b) the Descending-bid Auction (common known as the Dutch Auction, as first used in the sale of flowers in the Netherlands),


c) the First-price Sealed-bid Auction, and


d) the Second-price Sealed-bid Auction (also called the Vickrey Auction).


Besides these four academically researched types of auctions, as a matter of practice, there are also the Swedish Auction, the Japanese Auction and the Candle Auction. 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 something at auction. Auction Listing Agreement: A contract executed by the auctioneer and the seller which authorizes the auctioneer to conduct the auction and sets out the terms of the agreement and the rights and responsibilities of each party. Auction Marketer: An individual who contracts with sellers for the auction method of marketing property. In the case of real property, the individual may not actually conduct the sale but is directly responsible for all aspects of marketing the property. Auction Marketing: The method of marketing assets utilizing the auction method of sale. Auction Plan: The plan for pre-auction, auction-day and post-auction activities. Auction Price: The price of a property obtained through the auction method of marketing. Auction Subject to Confirmation: (See "Reserve Auction")


Auction Theory (Economics)—An auction is an event whereby different parties can bid for the right to purchase a good or service. Auction Theory is the applied branch of economics which deals with how people act in auction markets and researches the properties of auction markets. There are many possible designs (or sets of rules) for an auction and typical issues studied by auction theorists include the efficiency of a given auction design, optimal and equilibrium bidding strategies, and revenue comparison. Auction theory is also used as a tool to inform the design of real-world auctions; most notably auctions for the privatization of public-sector companies or the sale of licenses for use of the electromagnetic spectrum. Auction With Reserve: An auction in which the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time. Auction Without Reserve: (See "Absolute Auction") Auctioneer: The person whom the seller engages to direct, conduct, or be responsible for a sale by auction. This person may or may not actually call or “cry” the auction.

Ballroom Auction: An auction of one or more properties conducted in a meeting room facility. Bank Letter of Credit: A letter from a bank certifying that a named person is worthy of a given level of credit. Often requested from prospective bidders or buyers who are not paying with currency at auctions. Benefit Auction Specialist (BAS): A professional designation awarded by the NAA Education Institute designed to teach professional auctioneers the planning techniques that create successful benefit auctions. BAS auctioneers learn marketing skills and create a business strategy to build their clientele and profits. In order to be designated with the BAS, auctioneer-scholars are required to complete 21 classroom hours, a detailed written auction summary report, proof of at least six benefit auctions and 24 hours of continuing education every three years. Bid: A prospective buyer's indication or offer of a price they are willing to pay to purchase property at auction. Bids are usually in standardized increments established by the auctioneer. Bid Acknowledgment: A form executed by the high bidder confirming and acknowledging the bidder's identity, the bid price and the description of the property. Also known as "Memorandum." Bid Assistants: Individuals of a live auction team whose primary responsibility is to accurately interpret and effectively communicate buyer participation to their auctioneer. They should also be qualified to assist prospective bidders with the necessary information to make a better informed buying decision. Also known as “ringmen”, “bid spotters” or “groundsmen.”

Bid Caller: The person who actually "calls," "cries” or "auctions" the property at an auction, recognizing bidders and acknowledging the highest bidder. Commonly known as the auctioneer.


Bid Jumping—Bid jumping, a bidding strategy that may be used in an English Auction, which involves placing a bid that is above the next bid increment. The bid may jump to a price point high enough to discourage other bidders from continuing with the bidding. For example, if the bid price is proceeding from $100 to $120 to $150, the bidder may place a bid of $500. The advantage of this strategy is that the other bidders may drop out of the bidding process after being discouraged by the sudden increase in price or sensing defeat, leaving only the bid jumper. However, the bid jumper must consider the possibility that they may have paid an unnecessarily higher price in order to chase out the other bidders. In this example, the bidder may have been able to win the auction at a price of, say, $300, had they followed a normal bidding progression rather than using a jump bidding strategy. Bid Rigging: The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value. See “Collusion”. Bidder Number: The number issued to each person who registers at an auction. Bidder Package: The package of information and instructions pertaining to the property to be sold at an auction event obtained by prospective bidders at an auction. Also referred to as “bidder packet” or “due diligence packet.” Bidder's Choice: A method of sale whereby the successful high bidder wins the right to choose an asset or assets from a grouping of similar or like-kind assets. After the high bidder's selection, the asset is deleted from the group, and the second round of bidding commences, with the high bidder in round two choosing an asset, which is then deleted from the group and so on, until all assets are sold. Also known as “Buyer’s Choice.” Bookkeeper or Clerk: The individual responsible for the accounting and paperwork at an auction sale.

Broker Participation: An arrangement for third-party brokers to register potential bidders for properties being sold at auction for a commission paid by the owner of the property or the auction firm. Buyer's Broker: A real estate broker who represents the buyer and, as the agent of the buyer, is normally paid for his/her services by the buyer. Buyer's Premium: An advertised percentage of the high bid or flat fee added to the high bid to determine the total contract price to be paid by the buyer.


Candle Auction—A candle auction is an auction whose termination is signaled by the expiration of a candle flame. It ensures that no bidder knows the exact time the auction will end so that they can make a final winning bid. Of course, bidders in candle auctions try their best to anticipate when the candle flame will expire, aiming to enter the highest bid just before then, leaving other bidders no time to outbid them.

Caravan Auctions: A series of on-site auctions advertised through a common promotional campaign. Carrying Charges: The costs involved in holding a property that is intended to produce income (either by sale or rent) but has not yet done so, i.e., insurance, taxes, maintenance, management. Also known as “holding costs”. Catalog or Brochure: A publication advertising and describing the property(ies) available for sale at public auction, often including photographs, property descriptions and the terms and conditions of the sale. Caveat Emptor: A Latin term meaning "let the buyer beware." A legal maxim stating that the buyer takes the risk regarding quality or condition of the property purchased, unless protected by warranty. Certified Auctioneers Institute (CAI): The professional designation awarded to practicing auctioneers who meet the experiential, educational and ethical standards set by the NAA Education Institute. In order to be granted the CAI designation, auctioneer scholars must have been practicing full-time auctioneers for at least two year (prior to attending the institute), attend all three years of CAI with more than 120 classroom hours, complete all special projects and complete 24 hours of continuing education every three years.


Certified Estate Specialist (CES): A professional designation awarded by the NAA Education Institute to help professional auctioneers understand how to properly conduct and deal with the settling of estates. The course also educates professional auctioneers on working with family members and dealing with lawyers and accountants. In order to be designated with the CES, auctioneer-scholars are required to complete 21 classroom hours and complete 24 hours of continuing education every three years. Clerk: An individual employed by the principal auctioneer or auction firm to record what is sold and to whom and for what price. Collusion: The unlawful practice whereby two or more people agree not to bid against one another so as to deflate value or when the auctioneer accepts a fictitious bid on behalf of the seller so as to manipulate or inflate the price of the property. Commission: The fee charged to the seller by the auctioneer for providing services, usually a percentage of the gross selling price of the property established by contract (the listing agreement) prior to the auction. Conditions of Sale: The legal terms that govern the conduct of an auction, including acceptable methods of payment, terms, buyer's premiums, possession, reserves 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. Also known as “Terms & Conditions”. Conference and Show (C&S): Annual conference and exposition of the National Auctioneers Association. Also known as “International Auctioneers Conference & Show”. Continuing Education Units (CE's or CEU): A measure used in continuing education programs, particularly those required in a licensed profession in order for the professional to maintain the license. Contract: An agreement between two or more persons or entities which creates or modifies a legal relationship.

Cooperating Broker: A real estate broker who registers a prospective buyer with the auction company, in accordance with the terms and conditions for that auction. The broker is paid a commission only if his prospect is the high bidder and successfully closes on the property. Also known as a “participating broker”. Critical Path: Sequence of key tasks to be done by auction contractor or other designated parties on specified dates, leading to desired goals.


Cutting the Bid—A bidding strategy that may be used in an English Auction, in which the bidder places a bid that is less than the amount that the bidding has been proceeding with. For example, if the bid has been progressing from $100 to $150 to $200, a buyer may want to bid at $180. For this to happen, the buyer must signal the auctioneer to make his intentions known. When cutting the bid by half, the common signal is to raise the arm and hold one hand horizontally to the next with the palm facing downwards. If the auctioneer gives the go-ahead for the bid price, the buyer announces the $180 bid price and waits to see if there is a higher bid.

Dual Agency: The representation of opposing principals (buyers and seller) at the same time. Due Diligence: The process of gathering information about the condition and legal status of assets to be sold.


Dutch Auction (or Descending Auction)—Works in exactly the opposite way than the Ascending Auction, whereby the auctioneer starts with the highest asking price and lowers it until it reaches a price level where the bids received will cover the entire offer quantity. The first bidder who calls out that they will accept the current price wins the object at that price. A Dutch Auction is a price discovery process, Dutch Auctions are appropriate for instances where a large quantity of an item is being offered for sale, as opposed to just a single item.

Education Institute (EI): NAA members are selected by the NAA Board of Directors to be Trustees of the Education Institute and carry out the association’s mission of continuing education to NAA members.


English Auction (or Ascending Auction or Open Cry Auction or Oral Auction)—The auction starts with the auctioneer announcing the suggested opening bid or reserve price for the item on sale. The buyer with the highest bid at any time is considered the one with a standing bid, which can only be displaced by a higher bid from the floor. If there are no higher bids than the standing bid, the auctioneer announces the winner, and the item is sold to the person with the standing bid at a price equal to their bid. If the reserve price is not met or no buyer places an economically fair bid, the seller can take the item off the market. This auction can be run by having either the seller (or auctioneer) announce the prices, or by having the bidders call out their own bids themselves (or by having the bids submitted electronically with the best current bid posted). In the economic model most commonly used by auction theorists (often called the Japanese Auction), the price rises continuously while bidders gradually quit the auction. Bidders observe when their competitors quit, and once someone quits, they are not allowed back in. In Auction Theory, there is no possibility for one bidder to pre-empt the process by making a large "jump bid". In real life auction practice, bidders may be allowed to bid at any level (including “jump bidding”), or quit for one or more bidding rounds but opt to re-enter the bidding at a later time but before the end of the auction. Estate Sale: The sale of property left by a person at his or her death. An estate auction can involve the sale of personal and/or real property.

Federal Deposit Insurance Corporation (FDIC): The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress to maintain stability and public confidence in the nation's financial system by insuring deposits, examining and supervising financial institutions for safety and soundness and consumer protection, and managing receiverships. Federal Home Loan Banks (FHLB): The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world. Federal Housing Administration (FHA): The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world.


First-price Sealed-bid Auction—Each bidder independently submits a single bid, without seeing others' bids, and the object is sold to the bidder who makes the highest bid. The winner pays their bid (that is, the price is the highest or "first" price bid).

Graduate Personal Property Appraiser (GPPA): The professional designation awarded by the NAA Education Institute to qualified property appraisers who meet the educational and experiential requirements of the Institute and who adhere to a strict code of ethics and standards of practice. In order to be designated with the GPPA, auctioneer-scholars are required to complete 35 classroom hours, a detailed written appraisal report and proof of at least two affidavits of appraisals. This designation also requires 24 hours of continuing education every three years.

Hammer Price: Price established by the highest bidder and acknowledged by the auctioneer before dropping the hammer or gavel.


Head Nod / Head Shake—A bidding strategy that may be used in an English Auction, in which head nods or shakes are used to communicate to the auctioneer a bidder’s willingness to continue bidding. If an auctioneer looks at a buyer and the buyer nods his head, it means that he is still in the bidding. However, if a buyer shakes his head, it means that they are withdrawing from the bidding.

Intellectual Property (IP): IP is a term referring to a number of distinct types of legal monopolies over creations of the mind, both artistic and commercial, and the corresponding fields of law. Under IP law, owners are granted certain exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; words, phrases, symbols and designs. International Auctioneer Champion (IAC)—Annual contest hosted by the National Auctioneers Association at its Conference & Show for bid-calling auctioneers. Each year, one female and one male auctioneer is declared the winner of the IAC. International Society of Appraisers (ISA)—The ISA is a not-for-profit, member-driven association formed to support ISA member needs and serve the public by producing highly qualified and ethical appraisers who are recognized authorities in professional personal property appraising.


Japanese Auction—Unlike an English auction where the price changes according to the bidders’ outcries, the bid price in a Japanese auction changes according to the auctioneer’s clock. Bidders only have the right to decide if and when to drop out of the bidding.


Lighthouse Bidding—A bidding strategy that may be used in an English Auction, when a bidder lifts his paddle up in the air and leaves it there, signaling that he is prepared to increase his bid indefinitely in order to win the auction. This is another strategy designed to discourage other bidders from continuing to bid any further because they expect the lighthouse bidder to outbid them regardless of how high a bid they make.

A lighthouse bidding strategy, even though it effectively signals the bidder’s willingness to “pay any price necessary”, may actually enable them to win the auction at a lower price than he would have otherwise. For example, a bidder who may have originally been willing to bid as high as $200 may drop out of the bidding at a lower price level because he believes the lighthouse bidder will outbid him no matter how much he bids. The risk of the lighthouse bidding strategy is that a rival bidder may bid up the price to a point much higher than he is actually willing to pay, just to make the lighthouse bidder pay a very high price to win the auction.

Listing Agreement: See “Auction Listing Agreement”. Listing Broker: A real estate broker who has a listing on a property and cooperates with the auction company by allowing the auction agreement to supersede their listing agreement. Livestock Marketing Association (LMA): The LMA is an association committed to the support and protection of the local livestock auction markets and the livestock marketing industry.

Market Value: The highest price that a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Also, known as Fair Market Value (FMV). For definitions of value, please visit to our appraisal terminology page. Master Personal Property Appraiser (MPPA): A professional designation awarded by the NAA Education Institute to help professional auctioneers learn the responsibilities of appraising assets. Designees are taught to conduct a complete and appropriate appraisal, as well as taught to know the various factors that affect the value of appraised items. MPPA designees specialize in one or more of the following areas: antiques & estates, plant machinery & equipment, construction & agricultural equipment or small business valuation. In order to be granted an MPPA designation, the auctioneer must already be credentialed with the GPPA.

Memorandum: Also referred to as a "Bidder Acknowledgment," or "Broker Acknowledgment," the memorandum is signed by those parties either on the auction floor or in the contract room. Minimum Bid Auction: An auction in which the auctioneer will accept bids at or above a disclosed price. The minimum price is always stated in the brochure and advertisements and is announced at the auctions. Multi-Property Auction: A group of properties offered through a common promotional campaign. The properties to be auctioned may be owned by one seller or multiple sellers. Multi-Seller Auction: Properties owned by multiple sellers, offered through a common promotional campaign and auctioned in a single event. Multiple Listing Services (MLS): The MLS is a suite of services that enables brokers to establish contractual offers of compensation (among brokers); facilitates cooperation with other broker participants; accumulates and disseminates information to enable appraisals; and is a facility for the orderly correlation and dissemination of property listing information to better serve broker's clients, customers and the public.

National Association of Marine Surveyors (NAMS): A professional association of marine surveyors (surveyors), persons who inspect a ship hull or its cargo for damage or quality, and provide a broad variety of consulting services for the maritime industry. The association also, upon examination and credentialing process, confers the Certified Marine Surveyor (CMS) accreditation, with designations for: Yachts and Small Craft, Cargo, and Hull and Machinery (including Fishing Vessels, Blue Water, Brown Water/Tugs and Barges). [Karatzas Marine Advisors & Co employs MAMS-accredited professionals.]

National Association of Realtors (NAR): The core purpose of the NAR is to help its members become more profitable and successful. National Auctioneers Association (NAA): An association of individual auctioneers united to promote the mutual interests of its members; formulate and maintain ethical standards for the auction profession; promote the enactment of just and reasonable laws, ordinances and regulations affecting auction selling; make the public more aware of the advantages of auction selling; and generally improve the business conditions affecting the auction profession. National Auto Auctioneers Association (NAAA): Founded in 1948, the National Auto Auction Association represents more than 317 auto auction companies, both domestic and international, with more than 8.9 million units sold each year. No-Sale Fee: A charge paid by the owner of property offered at a reserve auction when the property does not sell.

On-Site Auction: An auction conducted on the premises of the property being sold.

Opening Bid: The first bid offered by a bidder at an auction. Other Real Estate Owned (OREO): Real property owned by a banking institution that is not directly related to its business. In balance sheet terms, OREO assets are considered non-earning assets for purposes of regulatory accounting. OREO is most frequently a result of foreclosure on real property as a result of default by the borrower who used the property as collateral for the loan. Most items in this category are available for sale.

Participating Broker: See “Cooperating Broker”. Preview: Specified date and time property is available for prospective buyer viewing and audits. Also known as “Open House” or “Inspection”.


Real Estate (RE): Real estate, also known as real property, is a legal term that encompasses land along with improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location -- immovable. Real Estate Owned (REO): REO is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction. A bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the bank will legally repossess the property. As soon as the bank repossesses the property, it is listed on their books as REO and is categorized as an asset (non-performing). Referring Broker: A real estate broker who does not have a listing on a property but refers the auction company to a potential seller for an auction. Usually earns a flat fee commission for referring product to an auction company. Regroup: A process used in real estate auctions where a bidder has the opportunity to combine several parcels of land previously selected by other bidders, thereby creating one larger parcel out of several smaller parcels. This process is often used in conjunction with bidder's choice. Reserve: The minimum price that a seller is willing to accept for a property to be sold at auction. Also known as “reserve price”.


Sale Manager: The person designated by the auction company who is responsible for organizing the details of an auction. Also known as “project manager”. Sealed Bid: A method of sale where by confidential bids are submitted to be opened at a predetermined place and time. Not a true auction in that it does not allow for reaction from the competitive marketplace.


Second-price, Sealed-bid Auction (also known as Vickrey Auction)— In the second-price, sealed-bid auction, each bidder independently submits a single bid, without seeing others' bids, and the object is sold to the bidder who makes the highest bid. However, the price the auction winner pays is the second-highest bidder's bid, or "second price". In a Vickrey auction, the individual is bidding their true value and are not trying to assess what everyone else is going to bid. Therefore, in a Vickrey auction, the individual is bidding the maximum amount they are willing to pay and are not disadvantaged by it. By utilizing the second-price mechanism in a Vickrey auction, individuals bid truthfully – individuals are motivated to bid their maximum value because the individual understands that if their bid wins, they will only need to pay the second-highest bid value. The Vickrey auction was named after William Vickrey, a Canadian economist who won the 1996 Nobel Prize in Economics for his research on asymmetric information. Seller: Entity that has legal possession (ownership) of any interests, benefits or rights inherent to the real or personal property.


Stalking Horse —In the context of a Section 363 Sale (named after the section of the U.S. Bankruptcy Code that authorizes a debtor to sell its assets), a stalking horse is the first player on the scene for a Chapter 11 sale. The stalking horse negotiates an Asset Purchase Agreement (APA) with a debtor in possession for the sale of the distressed company’s assets. A subsequent competing higher bid can force the sale away from the stalking horse bidder and to a new buyer. Despite the potential downside risks of being stalking horse, the benefits of such a bidder to the estate are clear. A stalking horse provides a guaranteed purchase price, jump-starts the bidding process, and creates the buzz necessary to attract higher and better offers. As such, stalking horses and their break-up fees can meet even the highest standards imposed by courts.

* According to Webster’s Revised Unabridged Dictionary defines stalking horse as “a horse or a figure resembling a horse, behind which a hunter conceals himself from the game he is aiming to kill.”

* Benefits of the Stalking Horse Bidder Role:

a) Bid Procedures (subject to bankruptcy court approval, the stalking horse bidder can heavily influence the procedures for the auction, can set milestones for the key dates in the bidding process, and can condition its obligation to close on a specific form of bid procedures being approved by the bankruptcy court),

b) Bid Protections (break-up fee and due diligence expense reimbursement)

c) Purchase Agreement,

d) Sale Order (stalking horse bidder will draft and negotiate the form of order approving the sale)

e) Diligence (the stalking horse bidder can get a head start and significantly more time to conduct diligence as compared with the other bidders),

f) Financing (generally, a Stalking Horse APA does not contain any financing contingency),

g) Exclusivity (in certain circumstances, the stalking horse bidder may be able to negotiate for exclusivity with the debtor during negotiations with the debtor on the Stalking Horse APA and bid procedures).

* Risks of the Stalking Horse Bidder Role:

a) Bankruptcy Court Approval Risk,

b) Third Party Objection Risk,

c) Bid Protection Risk, d) Topping Bid Risk, and

e) Decline in Value During Action. Subject to Confirmation: See "Reserve Auction"


Swedish Auction—In a Swedish auction, the seller of the item up for auction is free to accept or decline any bids by a buyer. It is less regulated, and the bidders are not bound by the bids they put forward. The auction originated from the Swedish real estate market.


Targeted Auction (also referred to as a Controlled Auction)—A practice term whereby an auction is open to a small group of qualified buyers / bidders, that are allowed to compete in the auction. The number of buyers is typically limited to about three (3) to ten (10), and only includes buyers that fit criteria set by the seller, such as financial ability to lodge a deposit with escrow account, etc


Tax Sale: Public sale of property at auction by governmental authority due to nonpayment of property taxes. Terms and Conditions: The printed rules of the auction and certain aspects of the Purchase & Sale Agreement that are read and/or distributed to potential bidders prior to an auction sale. Tie Bids: When two or more bidders bid exactly the same amount at the same time. This must be resolved by the auctioneer. Trustee's Sale: A sale at auction by a trustee.


Uniform Commercial Code (UCC): The UCC, first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all U.S. states. Uniform Standards of Professional Appraisal Practice (USPAP): USPAP can be considered the quality control standards applicable for real property, personal property, intangibles and business valuation appraisal analysis and reports in the U.S. and its territories. USPAP was first developed in the 1980s by a joint committee representing the major U.S. and Canadian appraisal organizations. US Bureau of Alcohol, Tobacco, and Firearms (ATF): A unique law enforcement agency of the U.S. Department of Justice that protects our communities from violent criminals, criminal organizations, the illegal use and trafficking of firearms, the illegal use and storage of explosives, acts of arson and bombings, acts of terrorism, and the illegal diversion of alcohol and tobacco products.


Vickrey Auction (also known as Second-price, Sealed-bid Auction)— In the second-price, sealed-bid auction, each bidder independently submits a single bid, without seeing others' bids, and the object is sold to the bidder who makes the highest bid. However, the price the auction winner pays is the second-highest bidder's bid, or "second price". In a Vickrey auction, the individual is bidding their true value and are not trying to assess what everyone else is going to bid. Therefore, in a Vickrey auction, the individual is bidding the maximum amount they are willing to pay and are not disadvantaged by it. By utilizing the second-price mechanism in a Vickrey auction, individuals bid truthfully – individuals are motivated to bid their maximum value because the individual understands that if their bid wins, they will only need to pay the second-highest bid value. The Vickrey auction was named after William Vickrey, a Canadian economist who won the 1996 Nobel Prize in Economics for his research on asymmetric information.

Withdrawal: Failure to reach the reserve price or insufficient bidding.

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