AUC­TION

Finweek English Edition - - MONEY - Auc­tion com­mis­sion fee: Mar­ket­ing costs: Net profit af­ter mar­ket­ing costs: Per­cent­age of seller’s costs on cap­i­tal profit: Fin­week *If seller re­fuses a sale that meets the re­serve price (min­i­mum price re­quired by the seller) then seller is also li­able fo

Less com­mon is the selling of homes by auc­tion. Lo­cally there is still some­what of a stigma at­tached to the selling of homes by auc­tion as this is the plat­form typ­i­cally used to sell re­pos­sessed res­i­dences. Con­trast this with coun­tries like Aus­tralia where the auc­tion­ing of homes is the norm. But the auc­tion im­age may be chang­ing. Joff van Ree­nen of High Street Auc­tions tells that 95% of their residential prop­er­ties are pri­vate sales and very few are le­gal sales (e.g. re­poses­sions). But for High Street Auc­tions, the “auc­tion­abil­ity” of the prop­erty is what counts. And it is one of the rea­sons why around 50% of prop­er­ties are not ac­cepted for auc­tion, hav­ing not met their rat­ings cri­te­ria. WHAT YOU CAN EX­PECT TO PAY (BASED ON SALE PRICE OF R1 194 200 AND CAP­I­TAL PROFIT OF R556 900)

11.4% (10% plus VAT). Paid by buyer* Ap­prox. R13 680-R22 800 (incl. VAT)

and up­ward R544 900–R536 900

2.5%-4% and up­wards depend­ing on prop­erty and mar­ket­ing re­quire­ments. REA­SONS FOR US­ING AN AUC­TION HOUSE: On av­er­age, prop­er­ties stay on the mar­ket for 12 weeks be­fore selling. For sellers re­quir­ing a quicker process, auc­tions, which oc­cur monthly or even weekly, may be the so­lu­tion. Sales are non­con­di­tional and im­me­di­ate as the plat­form re­quires cash or pre-ap­proved fi­nance buy­ers. Buy­ers pay the com­mis­sion fee and auc­tions also present the op­por­tu­nity of se­cur­ing a sale in ex­cess of the re­serve price. But sellers do in­cur mar­ket­ing costs whether or not the prop­erty sells.

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