Property auctions – six tips for success
WITH BANK repossessions climbing, more property buyers and investors are using auctions to try and uncover the next great deal.
For newbies to the auction circuit, there are a few common practices to keep top of mind before raising a bidder’s paddle in the air, says Rob Whiteley of Rawson Auctions.
Find out as much as possible about the property you are interested in before you arrive at the auction. Most auctioneers provide a bidder’s pack that contains essential information about the property, such a diagram, details about rates and taxes, levies and zoning, as well as an offer to purchase form. Some simple online research before the auction can also help you find out some fundamental facts before investing your time and money.
Just as in traditional property sales, auction companies usually give prospective buyers a chance to inspect the property to be auctioned. These inspections are usually arranged by appointment or at specific scheduled times (such as an estate agent’s show day) designated by the auction company. This is an opportunity to find out all the finer details you need to know before bidding.
You are agreeing to buy a property with whatever defects it has at the time of sale, in the location stated in the offer. Unless there is some- thing specifically defined in the offer, the voetstoots clause means that the seller is not responsible for any damages or repairs the property may need. This could be as simple as a broken door handle requiring a new lock and mechanism, or as huge as a cracked swimming pool – requiring a total rebuild. Know what you’re getting into before you get into it. Also – especially with bank repossessed property – the buyer usually has to pay for the necessary electrical, plumbing and gas compliance certificates as well as outstanding rates and utilities bills.
Most property auction offers to purchase documents have no “bond clause” that is, a clause making the offer subject to the buyer obtaining a bond to fund the balance of the purchase price. Prospective auction buyers must be positive they will be able to fund the purchase – including the auctioneer’s commission.
You can raise a bond on auction property, but if this falls through after you are declared the successful bidder, the seller and the auctioneer are probably going to exercise their rights to some compensation from you for a lost deal. You must decide on the highest price you are willing to pay for the property in question – and add extra for additional fees. Have your funds in order and waiting in the wings by the time you go to the auction.
It has always been an auction requisite that any prospective bidder should show their bar-coded IDS before they are allowed to register at an auction. Since the Financial Intelligence Centre Act 38 of 2001 (FICA), auctioneers are also obliged to ask for proof of residence (in the form of a utilities bill or similar correspondence) and, if property is bought in the name of a company or a trust, bidders must provide resolutions by the members, directors or trustees giving them power to sign the offer on their behalf.
Most have mentally “moved into the property” on auction by the time they get to the bidding process or have started counting the cash that their tenant is depositing in their bank accounts. Whatever your expectations, come prepared with a price you can afford and don’t go over it.
“Remember, property auction sales are final. The bottom line is that you can buy property for exceptionally good value at real estate auctions. As a prospective buyer – do your homework beforehand; be sure of what you can afford at the time of the auction; and keep a cool head when bidding. Many first- time home buyers and investors have walked away f rom auctions with g reat deals,” says Whiteley.
C a l l Whi t e l e y o n 0 8 3 414 7943 or email rob@rawson auctions.com.
GOING, GOING, GONE... More property buyers and investors are using auctions to try and uncover the next great deal.