Real Estate Investor Magazine South Africa November 2013 | Page 36

ACQUIRING

BY ANGIE REDMOND

Auctions

Are they a bargain or a bad idea?

I

n July this year, the total value of properties that
were under the hammer was down 75% in an
18-month period. “The market was worth an
estimated R6bn/year before the Auction Alliance
fallout early last year. It’s down to R1.5bn,”
says High Street Auction Co joint MD, Lance
Chalwin-Milton.
Is this the slow demise of the once booming
auction industry or merely a sign of the hard
economic times coupled with the scandals and sense
of mistrust that surrounded the auction industry?
The drop in sales volumes seems to be largely due
to the banks keeping their distressed properties
off the auction floor following the allegations of
collusion that Auction Alliance embroiled the
auction industry in. Banks are instead using their
own online sales portals and real estate agents to
sell off the distressed properties in their portfolio.
Despite this, the auction industry is still a vital part
of the property market.
CEO of Claremart, Jonathan Russell Smiedt,
says: “In general terms the auction industry seems
healthy and active and we really can only talk
from our perspective. We are finding that buyers
are attending our auctions in great numbers (both
on-site and at our multiple property auctions) and
we are selling property generally at prices that
reach the Liquidators’, Trustees’ and Executors’
expectations. There will always be those who will
remain with traditional selling structures but many
of them are indicating a scepticism with these
methods and ultimately are prepared to consider
auction as an alternative rather than close the door
on selling.”
Auctions are still a viable and fast way to sell
a property, despite the past scandal and the
struggling economy, there are still deals to be had
at auction, and the scandal of Auction Alliance has
ensured that the auctioneers left behind in it’s wake
take honesty and integrity serioulsy. “Let’s tackle
this head on: there is no doubt that the auction
industry’s reputation was damaged by the Auction
Alliance ghost-bidding scandal. It’s inevitable that
allegations of collusion between auctioneers, banks,
liquidators and attorneys affect public perception of
the industry as a whole.
32

November 2013 SA Real Estate Investor

In the wake of this, comments by
Tirhani Mabunda, chairman of the
South African Institute of Auctioneers,
that South Africa’s auction profession is
‘riddled with corruption’ have left sellers
and buyers alike uncertain as to the ethics
within the industry.” “So, can you trust
us? The short answer is a resounding yes.
We are completely in agreement with
Mabunda’s insistence that our industry
be properly regulated and that there be
entry level educational requirements for
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