Buoy­ant mar­ket for auc­tion­eers

Con­sumers are vol­un­tar­ily sur­ren­der­ing their as­sets

Finweek English Edition - - Focus On -

TOUGH ECO­NOMIC TIMES are keep­ing auc­tion­eers busy. With in­ter­est rates, inflation, in­sur­ance and fuel costs con­stantly in­creas­ing, bank re­pos­ses­sions and in­di­vid­ual se­ques­tra­tions are def­i­nitely up, which means more ve­hi­cles and homes go­ing un­der the ham­mer.

Clive Lazarus, of Park Vil­lage Auc­tions, says con­sumers are vol­un­tar­ily sur­ren­der­ing their as­sets. “The monthly re­pay­ments are stretch­ing them be­yond what they can af­ford. And es­pe­cially so in the su­per lux­ury mar­ket, with as­sets such as boats and jet skis. Those aren’t es­sen­tial to everyday liv­ing and the con­sumer is sim­ply hand­ing back the keys to the bank.”

Lazarus says that be­fore banks re­pos­sess an as­set, they make a sin­cere ef­fort to ac­com­mo­date the debtor through loan ex­ten­sions, lower monthly re­pay­ments or how­ever else the debt can be ac­com­mo­dated. “But at some point when that’s in­suf­fi­cient they do have to take back the as­set and hand it over to the auc­tion­eers for sale.”

It’s been re­ported that re­pos­ses­sions have dou­bled from a year ago, with one lead­ing bank in­di­cat­ing it re­pos­sessed al­most 2 000 ve­hi­cles in June this year, against just more than 1 000 a year ago, with the to­tal mar­ket be­ing about 6 000 re­pos­ses­sions/month.

With an ar­ray of mo­tor ve­hi­cles now be­ing sold on auc­tion, Lazarus says the buyer pro­file is def­i­nitely chang­ing. “Pre­vi­ously dom­i­nated by the trade there’s far greater in­ter­est from pri­vate buy­ers, who feel they

get bet­ter value from an auc­tion than from a mo­tor dealer. There are some very good deals avail­able on low mileage, up-mar­ket late model ve­hi­cles and the mo­tor plans on those as­sets are fre­quently trans­fer­able to the new owner.

“Buy­ers are now very as­tute and in­formed and know the price they should be pay­ing for as­sets. And that dis­ci­plined ap­proach pre­vails over any pos­si­ble auc­tion fever. Peo­ple who couldn’t af­ford a new car are now able to pick up sig­nif­i­cant value at an auc­tion, where ve­hi­cles are go­ing for 10% to 15% less than trade value.”

Lazarus says ve­hi­cle buy­ers at auc­tions are of­fered greater pro­tec­tion than they would re­ceive from a dealer. “The his­tory and pedi­gree of that ve­hi­cle are known – the ser­vice book is avail­able and the buyer sees which fi­nan­cial in­sti­tu­tion the car has come from. The process is ex­tremely trans­par­ent. We won’t buy a ve­hi­cle from an in­di­vid­ual and on-sell it. We deal with the in­sti­tu­tions and they at­tend our auc­tions to make sure ev­ery­thing is pro­fes­sion­ally ex­e­cuted and ac­counted for.”

In the res­i­den­tial prop­erty mar­ket, ac­tiv­ity is height­ened due to con­sumers un­der pres­sure and bat­tling to meet monthly mort­gage re­pay­ments. Lazarus says the com­mer­cial and in­dus­trial prop­erty sec­tor is hold­ing up far bet­ter and own­ers are even see­ing very good re­turns from rental in­come streams, propped up by a short­age of prop­er­ties in that sec­tor.

“The com­mer­cial and in­dus­trial sec­tors take longer to re­spond to an eco­nomic down­turn. Va­cant land on our books is tak­ing a bit longer to sell due to as­so­ci­ated is­sues, such as zon­ing de­lays and power sup­ply con­straints. With re­gard to as­sets com­ing to us from busi­ness liq­ui­da­tions that’s climb­ing slightly but it’s nowhere near the lev­els we saw in 1995 and 1996.”

Lawrence Wulf­sohn, spokesman for Park Vil­lage Auc­tions prop­erty divi­sion, says buy­ers pick­ing up com­mer­cial and in­dus­trial prop­erty in­vest­ments at auc­tions should see their in­vest­ments “turn­ing into gold”. “Al­though buy­ers are be­com­ing more se­lec­tive, they’re acutely aware new de­vel­op­ments sim­ply won’t be able to go ahead due to the Eskom mora­to­rium on power sup­ply and that the val­ues of ex­ist­ing prop­er­ties will ben­e­fit.

“Eskom de­nies there’s an of­fi­cial mora­to­rium on new power con­nec­tions as such and prefers to in­di­cate it won’t give quotes on new con­nec­tions for the next six months. To us that means the same thing and the end re­sult is that ex­ist­ing prop­er­ties with al­ready in­stalled ser­vices will be in great de­mand.”

Ve­hi­cle buy­ers at auc­tions are of­fered greater pro­tec­tion.

Clive Lazarus

Some good deals avail­able on low mileage up-mar­ket late model ve­hi­cles. Main Reef

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