LINDSAY WILLIAMS: Property auctions - we hear about them, but at the end of the day people don’t really use them, do they?
RODNEY BECK: They do use them, they definitely do use them. Sellers? Definitely! It’s a great way of getting your property sold today!
LINDSAY WILLIAMS: Is your business booming at the moment?
RODNEY BECK: Business is very good at the moment. Very, very good!
LINDSAY WILLIAMS: Tell us how it works - I can understand somebody who says "I don’t want to have a show day. I want to sell my residential property, and there’s an auction next Wednesday!" How does it work in the industrial market?
RODNEY BECK: Very similar to that. The owners, or the sellers contact us - we do a valuation of the property to see that it is the right sort of price he’s looking at. From there we put it on auction - where all your buyers congregate in one spot. It’s transparent. It’s a non-suspensive deal - in other words, they don’t have to wait for bonds. It allows the seller to test the market. The price can be reserved, and the asset can be presented to the maximum buyers gathered at the same place at the same time.
LINDSAY WILLIAMS: Is it the most efficient way to do things - there must be advantages and disadvantages to the whole process?
RODNEY BECK: There are obviously more advantages to it - because of some of the reasons I’ve mentioned. One finds that it’s, basically, a cash deal. Once your buyer is there he makes his offer - if the bid falls to him, it can be accepted. There are a certain number of days that it can be accepted in - depending on how the seller wants to structure it - and at the end of, say, 30 days the money is paid into the bank. It’s a quicker way to get your property sold.
LINDSAY WILLIAMS: Is it a cheaper way, in terms of efficiency and cost - does it help the buyer in that regard?
RODNEY BECK: You mean, to help the buyer?
LINDSAY WILLIAMS: Yes, in terms of transactional costs, commissions…
RODNEY BECK: In auctions, in all instances where we’re concerned, the buyer pays the commission - but then he’s getting everything straight away, there are no delays. He knows what he’s getting - he sees what he gets, he is given information on the property before. From an advertising point of view - it’s the seller who pays that. The buyer is liable for the auctioneer’s commission, he will also be liable for transfer costs, or vat, if applicable.
LINDSAY WILLIAMS: Any particular sector of the commercial property market that lends itself to auctions - retail, industrial, office space - which is the best?
RODNEY BECK: All three are pretty busy. At the moment the flavour of the month is definitely retail, followed closely by the industrial market - which is also booming - and we are finding very little stock at the moment. There is a definite demand for industrial properties.
LINDSAY WILLIAMS: Prices - what sort of prices are you achieving? Take the last six months - we know the property market is in an upward spiral - are you getting really good prices? Are you finding people trying to gazump each other at these auctions?
RODNEY BECK: Very much so. The prices are being achieved. You know, it’s a difficult one to answer because we are getting prices anything from R1.5-million up to R13-million. So it just depends on the area, and what the property is offering, what tenants are in the property, or is it an empty property? So prices certainly vary. It just depends on the auction. But definitely, guys are gazumping, and jumping in - and even after the final bid has closed there are guys phoning up afterwards who want to put in a higher offer. Then we’ve got to go back to the original purchaser, obviously, which is stated at the auction.
LINDSAY WILLIAMS: The general message is, then, that the demand is outstripping supply in commercial property at the moment?
RODNEY BECK: Very much so. I would agree with that 100%.
