Thinking about selling heavy equipment, vehicles and tools through an auction? Whether you’re offloading a single skid steer or liquidating a business, understanding auction terminology can make the process smoother, more transparent, and ultimately more profitable. This guide breaks down the key auction terms every seller should be familiar with before listing their items. From consignment agreements to closing formats, this is your crash course in how the auction process works—especially when it comes to machinery, vehicles, and industrial equipment.
1. Lot
A “lot” is any item or group of items being sold under one listing number. It can be a single vehicle, a piece of machinery, a tool set, or a bundled package of items.
Example: “Lot 205 – 2019 Ford F-350 Flatbed Truck”
How you group or present items can affect how much interest they generate at auction.
2. Yard or Auction Site
Most auctions take place through a centralized sale yard, where consignors deliver equipment before the event. This allows buyers to preview inventory in one location and gives the auction company time to clean, photograph, and catalog items for marketing.
3. Commission or Seller Fee
Some auction companies charge a commission for its services, usually as a percentage of the final sale price. This fee typically includes marketing, listing, communication with bidders, and secure handling of payments. Be sure to review this part of your consignment agreement. Tip: Not all auction companies charge a commission. Ask your auction rep to explain commission structures clearly upfront.
4. Staggered Lot Closings
Online auctions don’t usually end all at once. Instead, lots close one at a time—often with a short interval between them (e.g., every minute). This staggered format helps bidders focus on specific items and keeps the bidding process orderly and competitive. This helps an online auction mimic an in-person auction format.
5. As-Is, Where-Is
Auction items are sold “as-is, where-is,” which means no warranties, guarantees, or returns. What you see is what you get. Sellers aren’t required to make repairs, but being transparent about known issues helps build trust with buyers.
6. Pre-Auction Inspection Period
Buyers are encouraged to inspect equipment in person before the auction closes. This helps reduce surprises and buyer hesitation. For sellers, that means your equipment should be cleaned, labeled, and presented in the best light possible—both visually and mechanically.
7. Reserve Price
The reserve price is the minimum amount you’re willing to accept for an item. If bidding doesn’t meet that number, the item won’t sell. Setting the right reserve is a strategic decision—too high, and you risk scaring off buyers; too low, and you might leave money on the table. Please note that a reserve price is not a requirement with consignments, it is a preference of the seller. Not all auction items have reserve prices.
8. Payment and Settlement
After the sale, buyers are expected to submit payment within a set timeframe. Once the funds are cleared, sellers receive their payout (minus any agreed-upon fees). Always ask the auction company for an estimated settlement schedule so you can plan accordingly.
9. Soft Close
To prevent last-second sniping, many online auctions use a “soft close” feature. If someone places a bid in the final moments before the lot ends, the clock resets—usually by 2 or 3 minutes. This keeps the bidding fair and often leads to higher final prices. This can also help an online auction mimic an in-person auction format.
10. No Sale / Buyback
If an item doesn’t meet its reserve or receive any bids, it becomes a no-sale or buyback. The item is returned to the seller, who may choose to relist it, adjust the reserve, or sell it through another channel.
11. Buyer’s Premium
The buyer’s premium is an added fee that buyers pay on top of their winning bid. It’s usually a percentage of the bid amount. While it doesn’t impact your payout directly, understanding how this fee affects total cost helps sellers communicate clearly with interested buyers. For example, if the buyer's premium is 10% and the winning bid is $10,000, the buyer pays $11,000.
12. Consignment Agreement
Selling through auction starts with a consignment agreement. This is a formal contract where you (the consignor) authorize the auction company to market and sell your items. It outlines your responsibilities, fee structure, timelines, and expectations for the process.
13. Marketing Window
Before your equipment hits the block, the auction team will promote it through online listings, email campaigns, social media, and more. This marketing period builds interest, generates leads, and drives competitive bidding. The more exposure, the better the result.
14. Title & Ownership Documentation
For titled items like trucks, trailers, or certain types of machinery, you’ll need to provide a clean title and proof of ownership. Missing paperwork can delay the sale—or deter buyers altogether. Handle this early and keep things running smoothly.
15. Hammer Price
The hammer price is the final bid amount when the auctioneer (or system, in an online auction) declares an item sold. It's the winning bid before any additional fees, like the buyer’s premium, are added. Why it matters: As the seller, your commission is typically based on the hammer price—not the total amount paid by the buyer.
Example: If a bulldozer sells for $45,000, that’s the hammer price. If there’s a 10% buyer’s premium, the total paid by the buyer would be $49,500.
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Selling heavy equipment, vehicles, or tools through an auction is an efficient and profitable solution—especially if you understand how the process works. By learning the language of auctions, you’ll set clear expectations, avoid surprises, and increase your chances of a successful, hassle-free sale. Talk to your auction representative, ask questions, and take advantage of their expertise. Being informed is your first step toward a smooth and successful selling experience.
