Buyers’ market blues?
SPEEDY ROUTE: PROPERTY AUCTIONS ELIMINATE THE HAGGLING
Sellers don’t pay commission and proceeds are available much faster.
In the wake of the country entering its second recession since 2009, consumer confidence continues to plummet, allowing those in the financial position to purchase property to place dramatic downward pressure on property prices.
The June FNB House Price Index reflected a -2.0% year-onyear rate of house price growth in May* after a revised -2.1% in April when adjusting for CPI (Consumer Price Index) inflation.
According to Roy Lazarus of Park Village Auctions (PVA), this means that “sellers are often faced with the decision to either stay put or accept offers that are lower than their intended selling price – perhaps even at a potential loss – if the sale comes down to negotiations with a buyer.”
People looking to sell in a ‘buyers market’ turn to auctions mainly because of the swift nature of the transaction: haggling is eliminated and assets are realised almost immediately. This brings the entire sales process to finality much quicker – without any suspensive conditions.
Lazarus: “It is a method of congregating all the buyers in one spot at one particular time without the inconvenience of buyers being brought one at a time over a period of months.
“Sellers are not responsible for commissions and there are no further interactions between buyer and seller after the sale because all conditions are stated upfront before the auction and have to be abided with.
“An auction is not a suspensive sale or conditional. It should be transparent so buyers can weighup the options and decide on the spot. At the end of the auction, ‘on the fall of the hammer’, the deal is final and the proceeds are made available to the seller in a much shorter time.”
However, he says while auctions are advantageous for sellers in many ways, factors such as a property’s location will still influence the outcome. “Buyers will do their homework ahead of time and have an indication of what similar properties fetch. It is important for sellers to set a reasonable, market-related reserve price.”
Park Village Auctions are registered as professional valuers with the South African Council for the Property Valuers Profession and are recognised appraisers to the high court. PVA valuates and disposes of properties across the board, including commercial and industrial, agricultural, deceased, insolvent, sectional title and sequestrated estates.