Glossary of Terms
1: Auction Guarantee Sale Price (also known as the Reserve Price)
The Auction Guarantee Sale Price is an amount agreed to by the Seller and a Buyer (also known as the Auction Guarantor) and;
- Is the amount the Seller receives for their property from the Auction Guarantor in the event that the highest auction bid is lower than the Auction Guarantee Sale Price.
- Is the amount the Auction Guarantor agrees to pay the Seller for the property in the event that the highest auction bid is lower than the Auction Guarantee Sale Price.
- Is one of the amounts used to calculate the Auction Guarantee Profit.
2: Auction Guarantee Profit.
The Auction Guarantee Profit is calculated as the difference between the highest bid above the Auction Guarantee Sale Price (reserve price) and the Auction Guarantee Sale Price and if agreed to by the Seller and Auction Guarantor, less any sales commissions, fees or other amount as agreed between the Seller and the Auction Guarantor.
Example:
$520,000 – Highest / Winning Bid
less
$500,000 – Auction Guarantee Sale Price.
$20,000 – Auction Guarantee Profit
3: Seller’s Profit Share.
In the event that at the completion of the Auction the winning bid is higher than the Auction Guarantee Sale Price, the Auction Guarantee Profit Share Agreement is triggered. The Auction Guarantee Profit is calculated as per 2 above. The Seller’s Profit Share is an amount agreed prior to the auction by the Seller and Auction Guarantor and is expressed as a percentage of the Auction Guarantee Profit, a set amount, a sliding scale or as agreed to between the Seller and the Auction Guarantor.
4: Auction Guarantor’s Profit Share.
In the event that at the completion of the Auction the winning bid is higher than the Auction Guarantee Sale Price, the Auction Guarantee Profit Share Agreement is triggered. The Auction Guarantee Profit is calculated as per 2 above. The Auction Guarantor’s Profit Share is an amount agreed prior to the auction by the Seller and Auction Guarantor and is expressed as a percentage of the Auction Guarantee Profit, a sliding scale or as agreed to between the Seller and the Auction Guarantor.
To learn more about how an Auction Guarantee works please Click Here.