Pretoria Homeowners under pressure to sell their property may choose to auction it in the belief that this is a quicker process that will reach a wider buying audience.
But in the current market conditions, says Tjaart van der Walt, CEO of the RealNet property group, this does not necessarily hold true. “Our experience shows that auctions to sell residential property are not drawing large numbers of interested buyers – and on average only one out of five properties currently offered on auction actually finds a buyer.”
Maryna van der Merwe of RealNet’s Polokwane office agrees. As regional chairman of the Institute of Estate Agents of SA, she has received reports from disappointed homeowners in Limpopo Province who went to considerable expense to put their homes on auction, just to find very low attendance and no offers that even matched the reserve price.
“Many of these prospective sellers chose the auction route precisely because they were under financial pressure and needed to sell quickly. After paying high advertising costs up front – which they could hardly afford – they ended up under even more financial pressure,” she says.
Auction costs vary from flat fees of around R45 000 to commission fees of 10%, which is higher than the commission generally paid to registered estate agents. And some auctioneers charge additional advertising fees of R15 000 or more, Van der Merwe says.
It has also come to light that some auctioneers are not registered with the Estate Agency Affairs Board – a prerequisite for anyone who sells property in South Africa.
Van der Merwe says some auctioneers co-opt estate agencies to circumvent this requirement. “However, it has come to my attention that in some cases consumers are not offered the full spectrum of estate agency services.
“I have also received reports of instances where sellers had to sign a contract that gives such agencies a three-month mandate to market properties that do not sell on auction. This binds sellers to an agency that might not have been their first choice to market the property in the conventional way.”
Van der Merwe says owners under pressure to sell should weigh their options carefully. “In view of the poor attendance figures at auctions and low bids because of the abundance of property offered for sale in the current market, sellers may be better off if they negotiate marketing deals with reputable estate agencies.
“They may, for instance, consider matching the amount that an agency will spend on marketing their homes in order to make their properties stand out in a very tough market. It is very likely that such a contribution will amount to much less than carrying the full advertising costs of an auction.”
In all events, Van der Merwe adds, sellers should ensure that their asking prices are market-related.