The chang­ing face of auc­tions

New trends bring pos­i­tive change to on­line auc­tions, writes An­na­Marie Smith

Business Day - Home Front - - HOMEFRONT -

THE prop­erty auc­tion in­dus­try has over time moved from po­ten­tial bid­ders and buy­ers tra­di­tion­ally at­tend­ing auc­tions in per­son, of­ten af­ter con­duct­ing per­sonal pre­views of prop­er­ties be­fore an auc­tion.

Tech­nol­ogy has elim­i­nated the time-con­sum­ing pre­view­ing process and po­ten­tial buy­ers from across the globe now have the op­tion to pre­view prop­er­ties and many other items such as an­tiques and col­lecta­bles on­line.

In ad­di­tion, from the com­fort of their homes reg­is­tered bid­ders both lo­cally and glob­ally can now carry out an en­tire auc­tion trans­ac­tion — from bid­ding to buy­ing to con­clud­ing sales con­tracts — in an on­line en­vi­ron­ment.

How­ever, while sev­eral auc­tion­eers of­fer on­line bid­ding trans­ac­tions, not all ser­vices of­fer the guar­an­tee of a 100% se­cure in­house in­ter­net en­vi­ron­ment in which to com­plete the process.

Last week saw the launch of GoIn­dus­try DoveBid SA’s first com­plete and se­cure on­line prop­erty auc­tions of two Cape Town prop­er­ties, a stately am­bas­sado­rial home in up­per Wyn­berg and a fully op­er­a­tional guest­house in Con­stan­tia, that will be com­ing un­der the ham­mer in a live in­ter­net set­ting later this month.

The dif­fer­ence be­tween this new on­line ser­vice and ex­ist­ing ser­vices is the added ben­e­fit of an en­tire on­line bid­ding and buy­ing trans­ac­tion within a se­cure on­line en­vi­ron­ment with­out the need to em­ploy any third-party ser­vice providers.

MD John Cow­ing said: “Not only is our site fully in­ter­ac­tive while the auc­tion is hap­pen­ing, it is also 100% se­cure as it is hosted en­tirely in-house, from the reg­is­tra­tion process to the live auc­tion and the fi­nal sign­ing of the sales con­tract.”

An added ben­e­fit, said Cow­ing, is while a 10% de­posit re­mains a re­quire­ment at the fall of the ham­mer, auc­tion­eer’s com­mis­sion is only payable on trans­fer and not on the day of the auc­tion as gen­er­ally re­quired in the in­dus­try, thereby ex­tend­ing the length of the as­sisted trans­ac­tion ser­vice.

Go-Dove’s Kim Fa­clier said: “Just as on­line changed the face of bank­ing across the globe, so too will it change prop­erty auc­tions.

“With Go-Dove’s on­line plat­form you can host a mul­ti­ple prop­erty auc­tion event that in­cludes prop­er­ties from any­where across the coun­try or even across the con­ti­nent.”

Rael Le­vitt, Auc­tion Al­liance CE, said this grow­ing trend will com­ple­ment the in­dus­try — sim­i­larly to on­line gam­bling or homethe­atre view­ing — with con­sumers of­fered broader choices.

He said while the com­pany has of­fered ex­ten­sive on­line auc­tion fa­cil­i­ties for some time, a com­plete se­cure start-to-fin­ish ser­vice should be­come avail­able by Jan­uary next year.

Al­though this in­dus­try has be­come ac­cus­tomed to change, op­er­a­tors in the auc­tion busi­ness have not only ad­justed to new tech­nol­ogy pro­vid­ing max­i­mum abil­ity in on­line auc­tion­eer­ing but have more re­cently had to ad­just to com­ply with the strin­gent re­quire­ments of the Con­sumer Pro­tec­tion Act.

While the act of­fers both auc­tion­eers and con­sumers greater pro­tec­tion, it also places greater hur­dles in the way of smaller op­er­a­tors wish­ing to par­tic­i­pate in a newly reg­u­lated in­dus­try.

Lo­cal in­dus­try play­ers in­clude SA Home­traders, Prop­erty Auc­tions On­line, Pri­vate Prop­erty in col­lab­o­ra­tion with Bid or Buy, and banks such as Stan­dard Bank’s My that also pro­vides a link to Sher­iff Auc­tions.

In his pre­sen­ta­tion at the ninth an­nual IPD prop­erty in­vest­ment con­fer­ence in Cape Town last week, Le­vitt said al­though the in­dus­try is led by com­mer­cial real es­tate, the res­i­den­tial cat­e­gory is the sec­ond largest.

He said SA’s prop­erty auc­tion busi­ness has about 950 reg­is­tered op­er­a­tors, of which only 180 are op­er­at­ing, while em­ploy­ing an es­ti­mated 4 000 peo­ple.

Much has changed in the in­dus­try from 15 years ago when large prop­erty trans­ac­tions were con­cluded be­tween prop­erty bro­kers and in­vest­ment con­tacts among prop­erty funds, he said.

Le­vitt said the more ag­gres­sive mar­ket­ing of auc­tions has at­tracted a dif­fer­ent in­vestor class, as is seen in the es­ti­mated gross as­set value sold of R17bn, and also a notable change in the in­dus­try’s buy­ers’ pro­file that cur­rently has the largest buyer pro­file in African males 35 to 55 years old.

He said the auc­tion in­dus­try per­forms bet­ter in high-de­mand con­di­tions, but from five years ago when in­sol­vency and liq­ui­da­tion auc­tions were largely non-ex­is­tent, mar­ket dis­tress seen since the res­i­den­tial prop­erty bub­ble burst has largely been as a re­sult of failed prop­erty de­vel­op­ments.

Le­vitt said in 2009 in­sol­vency auc­tions ac­counted for 19%, and in­creased to 22% in 2010, with bank-re­lated auc­tions at 27% in 2009, drop­ping to 18% in 2010, while liq­ui­da­tions dropped in the first quar­ter of this year.

This fully func­tional guest­house in the Con­stan­tia winelands will be auc­tioned on­line in Au­gust through GoIn­dus­try DoveBid SA.

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