Property auctions are only continuing to rise in popularity, attracting an ever-growing number of new sellers and buyers. If you’re new to the auction world, we understand that some of the terminology can be daunting at first and you’ve likely come across words that seem alien to you. Following the first part of our glossary (Auction Terminology 101: A glossary | Network Auctions), we’ve compiled additional common property auction terms along with their definitions to help you navigate your journey with utter confidence.
Auctioneer
The auctioneer manages the entire auction process, serving as a vital link between buyers and sellers. They present each property lot, acknowledge bids, and announce the final sale status and prices. Additionally, the auctioneer is responsible for directing and conducting the marketing of the property and overseeing the subsequent sale by auction, as instructed by the seller.
Bid
An offer to purchase a property at a specified price.
Cash Buyer
A buyer who can finance the purchase of a property outright, without the need for a mortgage or having to sell a property to release funds.
EPC
An Energy Performance Certificate (EPC) tells you exactly how energy-efficient a property is. The EPC gives an energy efficient rating of A-G, with A being the highest rating and G being the lowest.
ERV
The estimated rental value (ERV) is the projected annual market rental value determined by the auctioneer or valuer. This figure is particularly crucial for investors purchasing properties at auction, as it provides a benchmark for potential rental income post-completion.
Freehold
Owning the freehold means you own the building and the land it stands on outright and indefinitely. Your name is recorded in the land registry as the “freeholder,” holding “title absolute”. While most houses are freehold, some may be leasehold. Therefore, it’s crucial to perform due diligence and review the legal pack before registering to bid.
Leasehold
With a leasehold property, you own the property but not the land it stands on. Leasehold ownership means you have a lease from a superior landlord, usually the freeholder, to occupy the property for a specified period, often long-term – often 90 years or 120 years but as high as 999 years – but can be short, such as a matter of months. Short-term leases are typically unmortgageable, making them attractive to cash buyers. Generally, the freeholder is responsible for maintaining common areas and the building’s exterior and leaseholders pay monthly/annual maintenance fees, service charges, building insurance, and ground rent. Leasehold terms vary from property to property, so it’s crucial to perform due diligence and review the legal pack before registering to bid.
Rental Yield
Rental yield indicates the annual rental income relative to the property’s purchase price and is presented as a percentage. The yield can be worked out by taking the annual rental income, dividing it by the property’s purchase price or value, and then multiplying by 100 to get the percentage.
Vacant
A property that is totally empty and will also not be occupied at the time of completion.
Vendor
The individual, company or organisation offering the property for sale, also referred to as a seller.
