Property auction glossary
The jargon made simple: To help you understand the new terms used around auction sales this is a simple glossary of common terms with an explanation behind each one.
A ratio that shows the amount of rental income received in a year relative to the purchase price of the property.
A property that has been taken back by a financial institution, for example, due to non-payment of the mortgage agreement.
To revoke, cancel or repeal (a law, order or agreement).
This is the minimum price that a seller is willing to accept for a subject property. This is a figure that the property will not be sold for less than. Reserve prices are not published; this is a private agreement between the auctioneer and the vendor and only known to them. The reserve can be subject to change at any time.
There may be a retention clause in a mortgage agreement where the lender may not be prepared to release the entire mortgage advance straightaway, some of the money could be retained until specified work is completed, for example properties are not deemed habitable until a toilet & kitchen sink are fitted.
Some auction house may use 'reverse hooks', in which they hold back some of the most popular properties until the very end to ensure bidders attend auctions towards the end of the day when the room may have quietened down.
RICS stands for Royal Institution of Chartered Surveyors
They are the global professional body promoting and enforcing the highest international standards in the valuation, management and development of land, real estate, construction and infrastructure.
Risk To Reward Ratio
Buying property at auction involves a number of risks and the reward for those risks should result in a lower purchase price than if you had bought through an estate agent. In buying property at auction and the speed with which the sale is made, it is critical you price the uncertainties. Unless a profitable RTRR exists there is no commercial incentive to buy at auction rather than through an estate agent.
A raised platform on which the auctioneer may stand to conduct the auction.