Pro's & Con's of an auction
There are incredible opportunities for buyers looking to invest at property auctions, as well as sellers looking to achieve a better selling price for their property in a highly competitive market.
To take full advantage, it is important to first differentiate between what type of auction you are attending, whether it is a bank auction or a voluntary auction.
Bank auction - these are always popular with buyers as most of the properties are sold at a discount. A bank auction takes place when the seller has fallen significantly into arrears with their bond and is given an ultimatum by the bank to sell the property at auction. The bank then agrees to write-off the remaining shortfall on the bond. Bank auctions are an excellent way to purchase realistically priced real estate, with all the normal warranties; on transfer the rates and taxes will be settled by the seller.
Voluntary auction - there is an increasing trend amongst South African sellers to sell their homes through an auctioneer, with the intention of attaining a better price by pitting buyers against each other in a live auction. The seller is able to set a reserve price and sale is subject to their acceptance of the bid.
From a seller's perspective, there are numerous benefits to selling your property at an auction.
Foremost, is that auction sales are conducted in an open forum, allowing buyers and the seller to gauge the property's true market value as the bidding process unfolds. Another major factor is that no commission is paid by the seller. Instead the buyer will pay a market-related auctioneer's commission, usually between 5 - 10%.
Generally, auction properties are sold "as it stands" or "voetstoots" and are not subject to any bond clause. The auction process essentially removes the seller from the negotiating process, unless the reserve price set beforehand is not met.
To find out more about buying or selling a property on auction get in touch with us today: https://www.homeandhectare.com/contact/
Author: Home & Hectare