Value buys to be had via online auctions

Value buys to be had via online auctions

In the current economic climate, opportunities abound for value-for-money property acquisitions, especially for those prepared to do their homework and consider all options – including bank sale properties on auction, says MC du Toit, CEO of BidX1 South Africa.

So what are ‘bank sales’ and does this mean there are bargains to be had?

Says MC: “More accurately, one would refer to these as forced sales, which means that legal proceedings have compelled the owner to sell, and this can be by way of liquidation, insolvency, court order or sale in execution. Then there are also deceased estates and divorce settlements, which are handled a bit differently from liquidations.

“You also get a bank instruction, which is when a bank has ‘bought in’ a property at a sale in execution and is now the owner of the property and which then instructs an auctioneer to proceed to sell the property by way of auction.

“In addition, there are bank assisted sales, which is when the property owner has defaulted on his or her bond repayments a few times and the bank and the debtor come to an agreement in terms of selling the property before legal action is implemented.”

MC says while all these terms can be confusing, essentially, the selling process remains very similar across all these instructions, with a few small exceptions in certain instances. For example, in the case of a deceased estate, the sale will require the consent of the executor and in some cases the Master of the Court, and this then becomes a condition of the sale. Furthermore, in most legal instructions, the sale will need to go through certain procedures in order to be confirmed by a specific party, whether it’s the trustee in an insolvent estate or the bank.

What should buyers look out for when they are considering buying a ‘forced sale’ property via on-line auction?

Firstly, MC advises you to read and fully understand the conditions of sale and rules of the auction. “Ensure you have inspected the property and if you are not in a position to do so, ensure you are aware if vacant occupation will be provided by the person authorised to sell the property or if that is not guaranteed. Bear in mind that you are buying the property as is, or voetstoots.

“Then while it seems obvious, buyers must make sure that they know what they can afford, and set their own price limit when bidding. If you have any questions, contact the auctioneer. We always assist buyers through the entire process and can be contacted regarding any questions. I always encourage buyers to rather ask the question then be unsure of anything.”

How do you know when you have the opportunity to buy a ‘bargain’ property?

“Quite simply, if you acquire the property for less than you were willing to pay for it. This underlines the importance of thoroughly carrying out due diligence and knowing what price properties achieve in the area before you bid on the auction,” says du Toit.

“Also check what comparative properties are being marketed at and then weigh up what you are prepared to pay for that particular property. If you decide that you are prepared to pay, say, R2 million for a property and if you get it for R1.7 million or R1.8 million or even R1.9 million, you have bought a bargain. And if your due diligence tells you that you would have been prepared to bid up to R2.2 million, then you have truly acquired a real bargain.

“There are definitely numerous opportunities to make sound acquisitions in terms of ‘forced sale’ properties, as long as you pay attention to all the above factors, and we are seeing high demand for these properties plus a high success rate for successfully concluded transactions”.

BidX1 South Africa’s next on-line auction takes place on 11 September 2019. For further information visit https://bidx1.com or email info@za.bidx1.com.

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