Prop­erty auc­tions – six tips for suc­cess

Weekend Argus (Saturday Edition) - - AUCTIONS -

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 auc­

GO­ING, GO­ING, GONE... More prop­erty buy­ers and in­vestors are us­ing auc­tions to try and un­cover the next great deal.

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