Checks and balances in place
With no barriers to entry, the auctioneering industry is extremely competitive
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
Buyers and sellers must make sure they’re
dealing with reputable players.