XOLILE BHENGU

AUCTIONS are regaining momentum as an alternative means for people wanting to sell residential properties — and its quicker than the traditional way.

Auction houses say that until recently the public had a negative perception of the industry, as people thought that auctions were resorted to by distressed sellers and buyers, and that auctions drew mainly bargain hunters.

In the past the biggest participants were commercial property sellers, but homeowners are now also beginning to see that auctions could work for them too.

The recent First National Bank Residential Property Barometer estimated that properties on sale were averaging 12 weeks on the market before being sold, and generally went for less than the initial asking price.

Tirhani Mabunda, chief executive of Tirhani Property Auctions, said auctions offered sellers and buyers the opportunity to do business quickly, transparently and competitively.

Mabunda said some South African home sellers had the perception that an advert by an auction house selling their property signalled that they were in financial trouble.

Mabunda quoted a property on the Dainfern golf estate as an example. It was up for auction with a bidding price starting at R7.5-million whereas its estimated value was R11-million. He said that the minimum bidding price meant buyers could not offer less, whereas the property could in fact fetch more than its stated value.

‘‘Because buyers go through a competitive bidding process of generally at least five prospectives, the seller can see first-hand what buyers are willing to pay. Of course, one can get bargains from auctions, but the opposite could also be true.” Mabunda said.

Alliance Group chief executive Rael Levitt said that over the last eight years auctions had become more popular and were being used by big commercial-property company owners such as Liberty, Sanlam and Old Mutual.

Source: The Times