The changing face of auctions
New trends bring positive change to online auctions, writes AnnaMarie Smith
THE property auction industry has over time moved from potential bidders and buyers traditionally attending auctions in person, often after conducting personal previews of properties before an auction.
Technology has eliminated the time-consuming previewing process and potential buyers from across the globe now have the option to preview properties and many other items such as antiques and collectables online.
In addition, from the comfort of their homes registered bidders both locally and globally can now carry out an entire auction transaction — from bidding to buying to concluding sales contracts — in an online environment.
However, while several auctioneers offer online bidding transactions, not all services offer the guarantee of a 100% secure inhouse internet environment in which to complete the process.
Last week saw the launch of GoIndustry DoveBid SA’s first complete and secure online property auctions of two Cape Town properties, a stately ambassadorial home in upper Wynberg and a fully operational guesthouse in Constantia, that will be coming under the hammer in a live internet setting later this month.
The difference between this new online service and existing services is the added benefit of an entire online bidding and buying transaction within a secure online environment without the need to employ any third-party service providers.
MD John Cowing said: “Not only is our site fully interactive while the auction is happening, it is also 100% secure as it is hosted entirely in-house, from the registration process to the live auction and the final signing of the sales contract.”
An added benefit, said Cowing, is while a 10% deposit remains a requirement at the fall of the hammer, auctioneer’s commission is only payable on transfer and not on the day of the auction as generally required in the industry, thereby extending the length of the assisted transaction service.
Go-Dove’s Kim Faclier said: “Just as online changed the face of banking across the globe, so too will it change property auctions.
“With Go-Dove’s online platform you can host a multiple property auction event that includes properties from anywhere across the country or even across the continent.”
Rael Levitt, Auction Alliance CE, said this growing trend will complement the industry — similarly to online gambling or hometheatre viewing — with consumers offered broader choices.
He said while the company has offered extensive online auction facilities for some time, a complete secure start-to-finish service should become available by January next year.
Although this industry has become accustomed to change, operators in the auction business have not only adjusted to new technology providing maximum ability in online auctioneering but have more recently had to adjust to comply with the stringent requirements of the Consumer Protection Act.
While the act offers both auctioneers and consumers greater protection, it also places greater hurdles in the way of smaller operators wishing to participate in a newly regulated industry.
Local industry players include SA Hometraders, Property Auctions Online, Private Property in collaboration with Bid or Buy, and banks such as Standard Bank’s My Roof.co.za that also provides a link to Sheriff Auctions.
In his presentation at the ninth annual IPD property investment conference in Cape Town last week, Levitt said although the industry is led by commercial real estate, the residential category is the second largest.
He said SA’s property auction business has about 950 registered operators, of which only 180 are operating, while employing an estimated 4 000 people.
Much has changed in the industry from 15 years ago when large property transactions were concluded between property brokers and investment contacts among property funds, he said.
Levitt said the more aggressive marketing of auctions has attracted a different investor class, as is seen in the estimated gross asset value sold of R17bn, and also a notable change in the industry’s buyers’ profile that currently has the largest buyer profile in African males 35 to 55 years old.
He said the auction industry performs better in high-demand conditions, but from five years ago when insolvency and liquidation auctions were largely non-existent, market distress seen since the residential property bubble burst has largely been as a result of failed property developments.
Levitt said in 2009 insolvency auctions accounted for 19%, and increased to 22% in 2010, with bank-related auctions at 27% in 2009, dropping to 18% in 2010, while liquidations dropped in the first quarter of this year.
This fully functional guesthouse in the Constantia winelands will be auctioned online in August through GoIndustry DoveBid SA.