Buying a property is a big deal so it is essential that you find out as much as possible about the buying process before you begin. One way of buying a property is through an auction.

Different types of auctions

It is important to distinguish between the different types of auctions:

Voluntary auction: The prime purpose is to get a better price for the property by playing buyer against buyer in a live environment. These auctions can work well for the seller in an active property market but seldom work for the buyer. The seller has a reserve price and the sale is subject to the seller’s acceptance.

Bank auctions: They are organised by the bank where the seller (who is significantly in arrears with his or her bond) is given an ultimatum to sell at the auction, subject to the bank accepting the bid. This is a great place to source realistically priced property, without the risks inherent in forced sales.

Sheriff auctions: They are the ultimate source of great value property. Where the bank is unable to rehabilitate the bond holder and they see no chance of recovering their funds, the bank applies to the court to sell the property to the highest buyer as it stands. The bank will let the property go at a big discount, often around 50% of value and this is where the real opportunities lie.

Important actions before the day of the auction

    • Increase your knowledge by reading articles about auctions.
    • Attend a few auctions where you just observe the entire process.
    • Do your homework and know what the property is worth and what you are prepared to spend.
    • Discuss the property with the agent and get a copy of the fact sheet that will give all the insight necessary to make an effective buying decision.
    • All properties on auction are sold “voetstoots” (which means “as is”). It is therefore important to inspect the property you are interested in before the auction date.
    • You have to arrange for mortgage finance before the auction is concluded.
    • Ask the auctioneer and his team any questions before the sale.

On the day of the auction

    • When registering as a buyer, ask for a copy of the Conditions of Sale and thoroughly inspect them.
    • You have to register on arrival.
    • Watch, listen, ask and bid only when you feel comfortable to do so.
    • You will be required to make payment of the deposit on the bid price, as well as the auctioneer’s commission, on the fall of the hammer.
    • Once you have registered as a buyer at a property auction and you make a bid, whether verbal or by raising your hand, it is considered binding, even if purchase papers have not been signed.
    • Lift your hand or paddle if you wish to bid.
    • State the amount clearly.
    • Make eye contact with the auctioneer to ensure that he or she acknowledges your bid.
    • When you no longer wish to bid, indicate this clearly to the auctioneer by shaking your head.
    • Settle immediately after making your purchases of movable assets or property.

After you have won the auction

    • If the final bid is awarded to you, you will sign the sale conditions, pay your deposit and make arrangements of how you will pay the balance still due.

Few important things to remember

    • Commission and taxes may be payable over and above your bid price.
    • All our auctions are taped in order to avoid confusion and disputes.
    • All deposits are paid into valid trust accounts in accordance with the relevant legislation.

 

Sources

www.property24.com
www.privateproperty.co.za
www.iol.co.za
www.bowman.co.za