Benefits of selling, buying on auction

THE misconception that auctions are reserved for distressed properties, or are hunting grounds for bargains, is steadily being corrected as more people opt for the auction floor, says PJ Veldhuizen, managing director of Gillan & Veldhuizen.

“The auction process has seen much success in the property market for many year. Selling on auction could realise more for your asset because of its competitive mechanism.

“It provides the seller with fair marketrelated prices, and creates opportunities for buyers to acquire properties at prices they are comfortable with,” he says.

Given the financial climate of 10 years ago, many property auctions occurred as a result of company closures or liquidations, with creditors, liquidators or trustees preferring to use the auction method to dispose of assets, he says.

“Banking institutions have for many years used the auction process to sell property, based on its transparency and other factors, and have achieved excellent results. These results are achieved through a larger pool of buyers and investors, with low cost to creditors.”

Lack of financing is a common hurdle to selling property out of hand as a high percentage of deals may not be approved by finance companies, Veldhuizen says.

“Auctions open up the market for a seller on a cash and voetstoots basis, with qualified buyers coming fully prepared to make property investments.

“While buyers may still obtain finance to pay for the property, making the purchase is not subject to them obtaining finance.

“The savvy seller or investor knows the auction route can be instrumental in achieving a better price where good demand exists, or producing a result for a seller where no demand exists. In particular, auctions are able to produce a sale when a seller requires urgent disposal.

“You have a process that is strictly regulated and transparent and offers instantaneous results, as well as value for money for the buyer and the seller.”