Auction Finance Glossary

Posted by John Yates

Greenfield Capital specialises in providing funds for auction purchases. Our streamlined process means you get the funds speedily.

So, if you are looking to buy a property at auction but don’t have all the funds necessary to make the purchase, then one of the best options is to take a bridging loan.

We have compiled an Auction Finance Glossary as an information guide.

Auction Finance Glossary


Actual Completion Date: The date of the completion of sale, generally used to for apportionment and to calculate the interest rate of the sale.

Auction: A sale, open to the public, which allows for the selling of property, personal items, or other assets, to the individual who places the highest bid.

AST: An acronym for Assured Short-Hold Tenancy, which represents the traditional form of tenancy that revolves around a fixed rental amount, a fixed term, and specific days.

Auctioneer: The individual responsible for presiding over an auction and accepting bids. It is the auctioneer’s responsibility to declare items sold or unsold, as well as to declare the final amount of money paid for each item sold.

Auction Catalogue: A document that lists the items for sale at an auction along with information about how to view every property, personal item, or asset, being sold by the auctioneer.


Bid: An offer made by a consumer to purchase an item at the stated price.

BMV: An acronym for “Below Market Valuation,” identifying a property as costing less than other local properties would at sale.

Bridging Finance: A loan with terms between three and twelve months in length. Used when funds are required immediately, but a short period, as when someone purchases a property but does not have the time to obtain a traditional mortgage when claiming it.


Completion: The Completion Period determines how long a buyer has to pay for a property that was won at auction. Typically, this period lasts between two and four full weeks.

Conveyancer: The individual who must perform all legal work related to the purchase or sale of a property via auction.

Covenant: Generally, this refers to a condition or restriction of ownership of any property purchased at auction. Bidders should always check this before they lodge a bid on any property, as it may severely reduce its value or restrict the sale entirely.


Disbursements: All expenses borne by a solicitor when assisting a purchaser. Disbursements can include land registry fees, search fees, and other crucial charges, and must be paid immediately.


Equity: Accrued when a property’s value exceeds the amount of the mortgage that must still be paid by the buyer. The difference between the two is termed equity.

ERV: Acronym that stands for “Estimated Rental Value.” This refers to how much a property would typically rent for in a given local area.

Exchanging Contracts: This process occurs after the final bid is made official, and involves exchanging contracts with the auctioneer to proceed with the purchase process.


First Charge: This is the first loan that will be offered for a given property or piece of real estate. Conventionally, this is a mortgage in almost every case.

Fixed Rate: The rate of interest charged to a lending product, generally not affected by the bank’s Base Rate.

Freehold: A freehold refers to a property that is owned, not leased.

FSV: An acronym for “Forced Sale Valuation.” This is the price a property would demand in a given real estate market if it were to be sold immediately or within a short window of time in the future.


Ground Rent: This rental fee is paid to the lessee or freeholder, and is typically determined at an auction. Many financial experts consider this a long-term investment.

Guide Price: The guide price is featured in the auction guide, and is set by the auctioneer before the event commences. This is a good way to determine what the reserve amount of any property may be at auction, though it could still vary in either direction from the guide price. The sale price itself will, of course, depend on any bidding activity that occurs at the time of auction.


Investment Property: Refers to a property being sold that will require occupant tenancy after the transaction closes.


Land Registry Documents: These documents will show debt-related financial overhangs or charges that remain outstanding, possibly complicating the final sale and transfer of the property to the highest bidder. It also determines the legal nature of the sale and defines what is being offered.

Leasehold: Leaseholds represent the time granted for residency at a property, and typically range between 99 and 125 years. At auction, most leaseholds are sold with a remaining amount of time after the original owner received their leasehold from local officials. This is the case unless the auction guide specifically states that a new lease will be granted to the winning bidder upon the closing of the sale. It’s worth noting that leaseholds shorter than 70 years can make a property difficult, if not impossible, to finance at major lending institutions.

Legal Pack: A prepared group of legal papers that pertain to the sale, generally exchanged between an auctioneer, a bidder, and the bidder’s legal representative. The pack typically includes the title and deeds, any leases, conditions of sale, searches, copy entries, and other key documents. This pack will be made available prior to the auction in the auction room. Buyers agree to be bound by all documents and terms contained within.


Negative Equity: Occurs when a property’s market value is lower than the amount of money still owed toward a mortgage or other loan.

NHBC Certificate: Building insurance. This backs the value and nature of the property and is often required by major financial institutions when buyers seek a mortgage or other lending product for real estate purposes.


OMV: An acronym for “Open Market Valuation.” This refers to the estimated value of a property if it were to be sold outside of auction on the regular real estate market.


Previews or Exhibitions: Dictates a time when the property can be viewed by potential bidders at auction. Open to the public.

Private Treaty: A private sale of any property at a price that has been agreed to by both parties at the time of sale.

Processing: The paperwork and waiting period imposed on buyers when they secure financing for a property at auction or otherwise. Typically refers to the period when a loan application is processed and funds are disbursed.

Proxy Bidding: This occurs when a bidder selects a representative and allows them to bid on their behalf. Typically, the representative, or proxy, is given strict maximum bid amounts and other instructions by the bidder. Special regulations, including deposit amounts and permits, may be required. Always contact the auction house or auctioneer for greater clarity regarding the use of a proxy bidder, and whether such practises are allowed at all.


Regulated Tenancy: This allows a tenant to occupy a home or other property for the duration of their lives. In some cases, this will apply to a tenant’s offspring and other heirs. This distinction is made because landlords do not have the right of possession of such properties; regulated tenancy helps guard against things like forced eviction and other legal hassles for tenants and their surviving family members in the event of death.

Remortgage Loan: A second or replacement mortgage used to free up capital when a home’s equity has risen dramatically. Remortgage loans are typically sought from a different financial institution and usually carry a better interest rate. In some cases, a bridging loan may be used to cover expenses during the approval and transition process to the new loan.

Reserve: The lowest possible price that an item will sell for at auction, set by the seller and the auctioneer. The amount is undisclosed to bidders.


Second Charge: Taken by a second financial institution to secure a loan behind a primary mortgage that already exists on the property.

Security: Securitisation of loan amounts, typically inclusive of the property itself as well as any other items or assets that may allow for repayment of the mortgage in the event of default. Property-based security often promotes better interest rates and lending terms.

Security Address: The address of the property or asset offered as loan security.

Settlement Figure: The amount of a loan to be repaid and the date by which it must be repaid to the lender.

Stamp Duty: A tax applicable to the purchase of all properties greater in value than £125,000.

Status: The credit score of a borrower.

Statutory Periodic Tenancy: The period after AST has expired and a tenant remains on the property.

Structural Survey: Conducted by a structural engineer, this process determines the structural integrity of a property.


Telephone Bid: A bid made via telephone. Bids via telephone are placed by auction staff after being received by bidders and other clients in the auction room.

Tenancies: A contract to occupy a property and pay rent for the privilege of said occupancy. Generally subject to rental and tenancy agreements between the parties.

Term Period: The length of a mortgage or other loan, typically given in years.

Title Plan: Dictates the property’s boundaries and restrictions, as well as the rights and responsibilities of the property’s owner after the sale has closed. This often dictates the uses of a sold property, whether commercial or residential in nature.


Underwriting: Determines the financial ability of a potential borrower to repay their obligations to a lending institution. Involves credit history and scores, employment, and other factors.


Valuation Inspection: Determines the value of a property as well as a piece of land.


Withdrawal: Applies to items offered at auction that have not met the set reserve price.


Yield: The amount of rental income generated by a property after one year of rental, written as a percentage of the property’s total price or current market value.


Greenfield Capital Auction Finance


Auction Finance Glossary

+John Yates