CFA Live & Online Auction Procedures 2 — Questions and Answers
Question 1: When a firearm lot fails to meet its reserve price at a live auction, what is the standard procedure?
- The lot is passed and may be relisted or sold privately (Correct answer)
- The auctioneer must lower the reserve on the spot
- The highest bidder automatically wins at their bid
- The lot is destroyed per federal regulation
Correct answer: The lot is passed and may be relisted or sold privately
A lot that does not meet its reserve price is 'passed' and the consignor may relist it, negotiate privately, or withdraw it.
Question 2: In online firearm auctions, what document must the winning bidder typically provide to the FFL transfer dealer before the gun is shipped?
- A copy of a valid government-issued photo ID (Correct answer)
- A completed ATF Form 4473 sent in advance
- A signed letter of intent from their local law enforcement
- Proof of NRA membership
Correct answer: A copy of a valid government-issued photo ID
The FFL dealer receiving the firearm usually requires a copy of a government-issued photo ID to initiate the transfer paperwork.
Question 3: What is the term for the incremental amount by which bids must increase during an auction?
- Bid increment (Correct answer)
- Buyer's premium
- Reserve delta
- Starting differential
Correct answer: Bid increment
A bid increment is the minimum amount a new bid must exceed the previous bid, set by the auction house.
Question 4: An appraiser notices a consigned rifle has a mismatched serial number on the bolt. What is the MOST appropriate action before the auction?
- Flag it for legal review and notify the auction house immediately (Correct answer)
- List it with a 'parts gun' notation and proceed
- Lower the estimate by 10% and continue
- Contact the ATF directly on behalf of the bidder
Correct answer: Flag it for legal review and notify the auction house immediately
A mismatched serial number may indicate an illegal alteration or theft; the appraiser must flag it for legal review before the lot proceeds.
Question 5: What is 'absentee bidding' in the context of a live firearm auction?
- A bid submitted in advance authorizing the auctioneer to bid up to a set maximum on the bidder's behalf (Correct answer)
- Bidding conducted entirely by phone during the sale
- An online-only auction with no live floor
- A bid placed after the auction closes for unsold lots
Correct answer: A bid submitted in advance authorizing the auctioneer to bid up to a set maximum on the bidder's behalf
Absentee bids are left-bid instructions that allow the auctioneer to execute bids up to a maximum amount for buyers who cannot attend in person.
Question 6: Which of the following fees is paid by the BUYER at most firearm auctions?
- Buyer's premium (Correct answer)
- Consignment commission
- Reserve fee
- Listing fee
Correct answer: Buyer's premium
The buyer's premium is an additional percentage of the hammer price charged to the winning bidder by the auction house.
Question 7: During a live auction, a telephone bidder drops the call mid-lot. What typically happens?
- The lot continues and the last confirmed bid from that bidder stands (Correct answer)
- The auctioneer immediately withdraws the lot
- The lot is re-opened from the starting bid
- The floor manager must hold the lot until the bidder reconnects
Correct answer: The lot continues and the last confirmed bid from that bidder stands
Standard auction practice treats the last confirmed bid as the telephone bidder's standing offer; the lot continues normally.
CFA Live & Online Auction Procedures 2
When a firearm lot fails to meet its reserve price at a live auction, what is the standard procedure?