Property Auctioneers in Gauteng
How the Auction process works.
Selling your property on Auction is fast becoming the preferred method worldwide for a quick and effective sale. The process is transparent and easy.
- Auctions take 3 weeks to arrange.
- Seller sets the reserve price – the property cannot sell for less than this amount but can sell for more.
- Property is sold as-is. No Suspensive conditions.
- Viewings are done on the day of the auction between 9 and 11 am.
- The commission is paid by the buyer, not the seller.
- The Buyer must pay the auctioneers commission on the day of the auction in cash, this is not refundable, this ensures that the buyers are serious.
- The Mandate is valid for 6 weeks, 3 weeks before auction,3 weeks after.
- Pre-auction marketing is done to promote the auction, The Auctioneer will place posters in the area, and contact his buyer list.
- If property doesn’t sell on the day of the auction, a second marketing campaign is done to market the property at the reserve price, for the remaining 3 weeks of the mandate.
- During the mandate period, no other agent can market the property, as this will reveal the reserve price.
- Most buyers expect to pay between 15 to 20% below market value.
- The Seller has a 50 % chance of selling, based on past Auction sales.
Expert Guidance for Auctioneers in South Africa
The bondholder will be a commercial bank in most cases.
The Creditor/Bondholder will seek a judgment order from the court. Once the creditor has obtained an order, the debtor’s moveable or immovable property will be attached by the Sheriff and sold at auction to the highest bidder, to settle the debt owed to it.
Typically, the property will be sold for an amount equal to the outstanding bond, owed to the bondholder (bank).
In most cases, a representative of the bank will be present at the auction to accept or decline the offer made at Auction.
These auctions offer the best deals for Buyers, but also have higher risks, including the Buyer not being able to view the property before Auction and the Buyer possibly having to evict the occupants of the property.
Pre-Auction Due diligence
Obtaining access to the property to do a valuation or to estimate the refurbishment costs that might be needed, will not be possible in most cases.
If the occupants are the current owners, they would naturally be unhappy about their property being sold at auction.
Some owners are willing to sell the property before auction, as they could settle their debt and avoid having the Auction in the first place.
a Prospective Buyer could contact the owner of the property, before the Auction and make an offer to him/her. This could benefit both parties, as the owner will avoid the Auction and the Buyer could purchase the Property for below market value.
This approach has the bonus of giving the Buyer access to the property to allow him/her to ascertain if any refurbishment is needed.
Services like Lightstone or Windeed can be used to find the contact details of the property owner.
The attorney acting on behalf of the bondholder/creditor will be listed in the notice of auction, they will provide some info on the property including the amount of outstanding municipal accounts.
Terms of the Auction
The terms of sale and all the possible costs involved in the auctions will be known before the auction.
On or before the auction, all bidders will have to register and pay a refundable cash deposit, the exact requirements to register for the auction differ from Sherriff to Sherriff, as do the requirements to bid on behalf of a company or another person.
Although it is possible to bid on behalf of another person, this is not advisable, as the Sherriff can, under certain circumstances, hold the person placing the bid responsible for all terms of the Sale Agreement, even when acting on behalf of someone else.
Outstanding rates, levies, and municipal accounts must be paid by the purchaser, these amounts will be available before the auction, the Sherriff will provide an estimate of the outstanding accounts on the day of the auction, it is incumbent on the bidder to verify the exact figure of outstanding accounts by contacting the relevant local municipality, or the attorney representing the creditor/bondholder, before the auction.
The Sherriff will read out all the terms of sale before the auction starts.
After the auction is concluded, the Sherriff allows for a period, usually 7 days, when a higher bid can be made by any registered bidder. Only after this period will the Sale agreement be signed between the Sherriff and the successful bidder.
The successful bidder will have to pay a deposit of 10 % of the bid amount, plus the Sheriff’s commission. The cash deposit paid before the auction will be deducted from these amounts.
In most cases, the successful bidder has between 15 to 21 days to settle the outstanding purchase amount.
It is possible to settle the outstanding purchase amount by obtaining a bond, but it’s advisable to have cash available for the purchase. as the 10 % deposit will be forfeited if the balance of the purchase amount is not paid in the 15 to 28 days after the auction.
Sherriff auctions are non-suspensive, meaning that they do not allow for time to arrange mortgage finance after the fall of the hammer.
These properties can have a tenant or the original owners as occupants.
If a rental agreement is in place, the tenants will have a right to continue with this agreement, even after the transfer of the property to the new owner.
In South African law, a rental agreement always supersedes a Purchase agreement.
If the occupant is the previous owner, they can be given the notice to vacate the property (usually the notice period will be the expected transfer date), unless they are willing to rent the property after transfer.
If the occupant is unwilling to vacate the property or continue with the existing lease agreement, it is up to the buyer to obtain vacant possession. This means that the buyer will have to apply to the High Court for an eviction order.
Evictions are regulated by the Prevention of Illegal Eviction and Unlawful Occupation of Land Act, so procedures must be followed carefully, giving special consideration to certain categories of people: the elderly, children, the disabled and households headed by women.
The process of evicting a tenant can be frustrating and costly, and represent the biggest risk to buying property at a Sherriff auction, doing complete due diligence on the tenant/occupant, before the auction, of the property, will mitigate the risk.
The exact cost and time needed to evict a tenant will depend on each case.
If the Bank’s reserve price is not met at the Sherriff auction, the Bank has the option to buy the property at the auction for the outstanding bond amount. These properties are then resold to the public.
These properties are advertised on the bank’s websites. It is possible to view these properties before making an offer and the Buyer can buy these properties using a bond.
Outstanding rates and taxes, levies and municipal accounts are not paid by the Buyer.
Buying a Property in Possession is less risky than buying at a Sherriff auction, but the cost of the property can be higher.
These auctions take place before Sherriff auctions.
These auctions take place when the owner of the property willingly puts the property up for auction, in order to settle his/her outstanding debt to the bank.
These auctions operate on similar terms as Sherriff auctions.
These sellers of these properties can also be individuals emigrating, divorcing or disposing of an unwanted inheritance.
An insolvent estate is an estate in bankruptcy.
A person can be declared insolvent after going through the sequestration process.
A deceased estate can become insolvent if the owner of the estate passed away and left behind a greater amount of debt than equity.
In both these cases, the estate must be sold off in order to repay debt.
These auctions are usually conducted by the local Sheriff, but the curator of the insolvent estate can appoint a private auctioneering company to conduct the auction.
These private auctioneering companies operate on the same principals as sheriff auctions, i.e. the buyer is responsible for outstanding levies, municipal rates, and taxes, water and electricity accounts, and the terms of sale is like that of a Sheriff auction.
Insolvent auctions offer the same opportunities and risks as Sherriff auctions.
These auctions are conducted when the owner willingly sells the property, the owner is not insolvent or has a judgement against them.
The commissions paid to the auctioneer tends to be higher than the commissions at sheriff auctions. Typically, this is around 10 %.
Since the seller has mandated the auctioneer to sell the property, it will not be necessary to evict the occupants of the property.
The terms of sale for these auctions differ from auctioneer to auctioneer and will be available before the auction. The terms of sale usually state that a 10 % deposit has to be paid after a successful bid has been placed, and in most cases allow for a period where any party registered for the auction , can place a higher bid , even after the fall of the hammer.
The properties can be viewed before the auction, and rates, levies, and municipal accounts will be up to date.
These auctions don’t offer quite opportunities a Sheriff auctions does, but the risks to these auctions are very low.
Why Use Realty Investors as Your Property Auctioneer in South Africa ?
BUYING ON AUCTION
BUY FOR LESS THAN MARKET VALUE EASY TRANSPARENT PROCESS – MOTIVATED SELLERS
SELLING ON ACTION
50 % SUCCESS RATE – CASH BUYERS IN MOST CASES – MOTIVATED BUYERS
BENIFITS OF AUCTION
COMMISSION PAID BY BUYER – PROPERTY SOLD VOETSTOOTS – MASSIVE MARKETING CAMPAIGN PRIOR TO AUCTION
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