Checks and bal­ances in place

With no bar­ri­ers to en­try, the auctioneering in­dus­try is ex­tremely com­pet­i­tive

Finweek English Edition - - Focus On -

AUC­TION­EER Belinda Bezuiden­hout, who co-owns and runs Auc­tion Op­er­a­tions, says hold­ing an auc­tion is like plan­ning a wed­ding. “There’s a wealth of ac­tiv­ity go­ing on be­hind the scenes and the pres­sure is im­mense down to the finest de­tail. For ex­am­ple, at a car auc­tion even the ve­hi­cles have to be ap­peal­ingly dis­played. You can’t have a row of white bakkies.

“It’s like get­ting mar­ried 10 times a month, with our ul­ti­mate goal be­ing to main­tain a fine bal­ance be­tween achiev­ing a fair price for the sell­ers – be­ing the banks and in­sur­ers – and en­sur­ing the buy­ing pub­lic gets a good deal. The stock we sell – ve­hi­cles, of­fice fur­ni­ture and any­thing else – must be of a good qual­ity.”

With no bar­ri­ers to en­try, Bezuiden­hout says the auctioneering in­dus­try is ex­tremely com­pet­i­tive and some bad prac­tices have made it some­what tainted over the years. “That’s why buy­ers and sell­ers must make sure they’re deal­ing with rep­utable play­ers. A good auc­tion­eer would ideally be trad­ing as a Pty Ltd com­pany with ex­ter­nal au­di­tors, would be a mem­ber of the South African In­sti­tute of Auc­tion­eers (Saia), which pre­scribes mem­bers must have fi­delity cover that pro­tects buy­ers and must de­posit sale pro­ceeds into a sep­a­rate trust ac­count.

“For auc­tion­eers in the fixed prop­erty mar­ket they would be a mem­ber of the Es­tate Agency Af­fairs Board. The auc­tion­eer should also be com­pre­hen­sively in­sured for risks, such as stock in tran­sit, theft, fire and pub­lic li­a­bil­ity. With up to 300 peo­ple at an auc­tion and sell­ing more than 1 000 ve­hi­cles/ month any­thing can hap­pen.”

Be­cause there are few pro­tec­tions avail­able to the pub­lic, Bezuiden­hout ad­vises buy­ers to fol­low some cau­tion­ary steps. “Ideally, al­ways deal with a Saia mem­ber, as any un­ac­cept­able prac­tices can then be re­ported and in­ves­ti­gated by that body. And try to deal with the big­ger rep­utable houses. When buy­ing ve­hi­cles, the buyer must at­tend the day be­fore preview and fully in­spect the car and talk to the floor as­sis­tants, who are there to help and ed­u­cate them. The qual­ity auc­tion houses will also in­di­cate if cer­tain as­sets have a prob­lem – for ex­am­ple, if there’s a gear­box is­sue. But it’s im­pos­si­ble for them to know ev­ery sin­gle prob­lem on each ve­hi­cle.”

Bezuiden­hout cau­tions buy­ers to al­ways read the con­di­tions of sale and de­ter­mine whether the de­posit is re­fund­able: some aren’t and there can be var­i­ous con­di­tions at­tached. “And al­ways re­mem­ber that auc­tions work on the ‘voet­stoets’ prin­ci­ple, where you re­ally don’t have re­course for what you’ve bought. On the day be guided by com­mon­sense and don’t get car­ried away by emo­tion and the at­mos­phere. Stick to your lim­its and your plan oth­er­wise you could end up over­pay­ing.”

Bezuiden­hout says buy­ing at an auc­tion can be like gam­bling. “Peo­ple get caught up by the mood and over­step their lim­its. If a buyer’s bid is ac­cepted and it tran­spires he doesn’t have the funds his de­posit may not be re­fund­able and he may even be charged for that item hav­ing to be re-ad­ver­tised at a sub­se­quent sale.”

Any pro­fes­sional auc­tion­eer will have nu­mer­ous checks, bal­ances, con­trols and sys­tems in place. Bezuiden­hout says as a mat­ter of course auc­tions should be au­dio recorded so dis­putes can be re­solved through play­backs. “Gen­er­ally, the auc­tion process is ex­tremely trans­par­ent and is pre­ferred to a ten­der sys­tem. Buy­ers are of­ten sus­pi­cious of tenders, as all bids hap­pen be­hind closed doors and the sys­tem can frus­trate them as they lose out be­cause of a very small amount in ten­der price dif­fer­ences. Auc­tions al­low you to see what oth­ers are of­fer­ing and the bid price can be in­creased ac­cord­ingly.”

Bezuiden­hout says be­cause the com­mis­sion struc­ture of auc­tion­eers is sim­i­lar across the board, a good auc­tion­eer will dis­tin­guish him/her­self through his/her re­la­tion­ships, in­tegrity, per­sonal de­liv­ery and ac­ces­si­bil­ity.

Buy­ing at an auc­tion can be like gam­bling

Belinda Bezuiden­hout

Buy­ers and sell­ers must make sure they’re

deal­ing with rep­utable play­ers.

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