What important terminologies should you know before attending an auction in the Philippines?
- As is
- Bid increment
- Buyer’s premium
- Competing bid
- Gavel’s up
- Hammer price
- Price realized
- Reserve price
- Times the money
Attending an auction in the Philippines for the first time is guaranteed to be a strange experience but in a good way. You’re going to feel an assortment of emotions at every step of the auction process. Excitement is the first to set in as you anticipate all the wonderful things you’re about to take home. That feeling may slowly pass and turn into nervousness and slight fear as you enter the auction house where you may find a lot of intimidating characters.
It’s normal to feel that way, though, because a lot of people really are intimidated by the auction scene, most especially beginners who have no idea what goes on during the event. After you get over your cold feet, you’re going to start to feel giddy again right before the auction starts, but that, too, will pass once you hear the auctioneer speak. The moment the auctioneer opens his/her mouth and spouts auction jargon is the time when you will feel immense confusion.
Unlike all the other emotions you’re going to experience at an auction, confusion is the one that you don’t want to feel. It will ruin the event for you and even prevent you from acquiring any of your desired items at an ideal price. In order to avoid this, make sure to study these important auction terminologies before you step out the house:
When an item, lot or property is sold “as is,” it means that it will leave the auction house in its current condition. Whether it’s in good shape or not, the seller will make no changes to it, so whatever defects and imperfections it has will not be fixed. For their own protection, buyers are encouraged to inspect and examine items during the preview day.
Bid increment is the amount at which the bid will increase, and it is always set by the auctioneer. As an example, let’s say that the current bid is at 100 PHP and the bid increment is at 50 PHP. The next person to place a bid by raising their hands or their paddle is automatically agreeing to a bid of 150 PHP, while the person after them will increase it to 200 PHP.
The buyer’s premium is an additional fee or charge that is added to the original price or bid of sold items. Usually, it is 10% of the highest or winning bid and accounts for administrative expenses. The responsibility of shouldering this extra fee falls upon the buyer.
Sometimes, auctioneers will say that they are accepting competing bids. What they mean by competing bids are those that are made from different sources. They may be coming from book bids, absentee bids, telephone bids, online bids, in-house audience bids, and other bidding platforms.
Every item in an auction is given a low and high estimate and it gives bidders an idea of how much it is expected to sell during the actual day of the auction. It may also be a solid basis for setting the reserve price of the item. These price estimates are given by experts and are based on the item’s condition and other auction records.
You know that the lot is about to close when the auctioneer starts to shout “gavel’s up” or “hammer’s going up.” These are verbal warnings that alert prospective buyers to make their final bids if they wish.
This refers to the price for which an item, lot or property has sold. Depending on the auction type, it can be the highest bid or second-highest bid given by participants. After stating the price of the winning bid, the auctioneer will drop the hammer as an indication that the lot is closed and the sale is complete.
Price realized is what you get when you add the hammer price and buyer’s premium. It is the actual and total amount that a buyer must pay in order to acquire his/her items or lot.
What auctioneers refer to as the reserve price is the amount the seller has chosen as the minimum allowable bid. It may or may not be disclosed by the auctioneer, but always remember that it is never lower than the low estimate. If the reserve price is not met, an item may go unsold.
Times the Money
There are times when lots containing a number of different items are sold and this is when the phrase is used. Once it has been announced that bids will be “times the money,” it means that bidders are bidding per item. Say a lot is up for auction and there are two items on that said lot. If you bid 100 PHP right then and there, your total bid will be 200 PHP since you’re putting a price on both items and not count them as a set.
One of the most important things you need to do in an auction in the Philippines is to listen. You need to hear every word the auctioneer says and this isn’t as easy as it sounds. Auctions are very fast-paced and it’s easy to get lost in a sea of auction terminologies. So, before you take part in your very first auction, make sure first that you learn of the important terminologies that you are, without a doubt, going to hear or read during the event!