Real Estate Investor Magazine South Africa July 2015 | Page 27

PROPERTY AUCTIONS: HEAD VS HAMMER
BY JOFF VAN RENEEN, DIRECTOR & LEAD AUCTIONEER, THE HIGH STREET AUCTION CO

Within the South African property industry, the prospects
of “auction as a sales mechanism” have risen like a
competitive bid. Despite the reputational challenges,
auctions refuse to stay down hammering critics with
successive successful sales and satisfied buyers.
The groundswell of residential, commercial & industrial
properties coming on the market for sale by auction is
a clear indicator that sellers are not in the favour of
lengthy procedures that one usually has to endure in
traditional real estate sale and much prefer the agility
of the auction floor. Moreover, auctions are proving to
be more transparent – as the buyer has the assurance of
having paid the right price.

to 20% deposit on auction day, and be able to come up
with the balance within 30 business days if your bid is
successful. If you need a mortgage, it is important for
you to discuss the financial implications with your bank
and have an in principle agreement in place to fund your
investment.
Auctions can be a bit intimidating for first timers, so
there is absolutely no harm in being the proverbial “fly
on the wall” at the first auction to familiarise yourself
with the bidding process.
When you actually bid during the auction, it is an
adrenaline rush, but do keep your pulse in check or you

Auctions are a fairly simple and straightforward way
of acquiring real estate. While perceptions exists that it is only for the

experts, a little research and tenacity can turn the first time into a rewarding experience.
Here are a few practical observations on how best to
use the platform to acquire the desired property without
breaking into a sweat.
It is important to seek out auctions – for example, High
Street Auctions hosts a monthly auction at the Summer
Place. The next obvious step is to research the properties
going on sale either through the company’s website
or the auction catalogue. You must never bid without
knowledge. So it is critical to study the types of property
on sale.
Once you have identified the property you are interested
in, it is essential that you request a viewing. While the
auction house will try its best to provide comprehensive
information upfront in the catalogue, it is best to verify
it personally. This groundwork will guide how you bid.
Before you raise the paddle, it is important to put
your name down as an interested party and register
as a bidder. The Consumer Protection Act Rules of
Auction also requires you to provide the necessary FICA
documentation. In order to register to bid you will be
required to read and accept the Conditions of Sale and
pay a refundable deposit prior to the auction.
You are advised to make your financial arrangements
prior to auction. You must have anywhere between 16%

risk getting knocked down by your own excitement.
This is where you have to make sure that you don’t get
carried away. Have a mental figure in your head that you
don’t want to go over.
At the auction, if you are the highest bidder, you are
legally bound to complete the sale on the day and under
the terms stipulated in the contract. The urge to scratch
the back of your head must be avoided at all costs.
Provided that you are pre-registered, you can also
submit telephone bids to a member of the auction team
who make bids on your behalf. However, attending the
sale is by far the best way to bid and partake in the
excitement.
The thrill and euphoria of out bidding the competition
and winning is surreal. However lady luck has a minor
role to play, the god is in the details and how well you
have studied the property and how judicious is your bid.
Auctions are like speed dating – you have access to
a vast number of properties you can court and go the
distance if a particular property interests you. However it
is very easy to succumb to the charms of the auctioneer
and get emotionally involved with the process. In the
auction room, the hammer has the last say, but it always
pays to use your head.