Staving off auctions is their bread and butter

In a stagnant economy you might expect property auctions to be on an upward trend but, according to data provided by Lightstone, this sales method is in fact declining. For all properties in all value categories, sales-in-execution notices declined from 12 930 in 2012 to 9 340 in 2015, with 5 170 notices in 2016 so far.

The number of notices that end in an auction are also significantly lower than in 2012. The statistics show that the majority of sales-in-execution notices this year have resulted in no sales.

The head of real estate at Lightstone, Hayley Ivins Downes, says the trend is the result of factors such as a slowing market and more available assistance for distressed homeowners. It also stems from tighter credit regulations when assessing affordability, as well as debt counselling being implemented, Downes says.

Contributing to the declining property auction trend is Problem Bond, which assists those at risk of losing their homes to the banks.

Every Friday all sales in execution are advertised in the Government Gazette, of which there are roughly 250 a week, says Problem Bond managing director Johan Muller. The company then traces the homeowners to offer its services in helping them to avoid an auction.

Usually when homeowners receive a summons, they do noth- ing because they believe they have no other recourse because they are already in arrears, Muller says. “Unfortunately, then the law takes its course. Many of our clients don’t receive the summons; they are unaware of the judgment because the sheriff just chucked it somewhere. Sometimes they just wake up and there is an auction.”

A sheriff, speaking on condition of anonymity, says the manner in which summonses can be delivered is regulated by law. And before a court awards a judgment, it has to be satisfied the other party has been given notice.

But Muller estimates about 60% of homeowners are unaware of the pending sale in execution when they are approached by Problem Bond.

A common solution the company provides is helping the client to restructure their loan with the bank. In many cases, Problem Bond has been able to have auctions cancelled by showing that the bank has debited legal fees against the bond account or changed the interest rate, Muller says.

The company takes on about 18 such clients a week, he says — those who can pay the required service fees — and has a success rate of between 70% and 80%.

In the event that a property does go to auction, the client can seek an interdict.

“We refer them to attorneys but that’s a costly process. Sometimes clients are between a rock and a hard place. Their case may have good merits but they don’t have the funding.”

Pieter Bezuidenhout* has had a running battle since the auction of his house in 2014. He had made arrangements with the bank to keep up with his bond repayments, so he was surprised to find his house up for auction. The selling price was not enough to cover the outstand- ing debt, and he was still responsible for the shortfall.

Confident he had been wronged, he refused to move from the property while Problem Bond took his matter to the high court.

“Just after the house was sold, the new owner came and threatened me,” he said. “Later they came to my house and broke the windows. They took off the doors and taps and even the palisade fencing.”

At another time, the new owner was granted an attachment order for the financial losses suffered, and was able to have the sheriff attach and sell Bezuidenhout’s assets.

This year, Bezuidenhout’s case succeeded in court.

“They [Problem Bond] picked up that the bank never had the right to put my house on auction. They were also charging me excessive rates.”