WORDS: Samantha Anderson
The residential auction market in South Africa has been predominantly seen as a sales avenue for deceased estates and repossessions. There is a stigma attached to a sign outside your home “On Auction”. “I have even had neighbours phoning me and complaining that I am bringing the neighbourhood into disrepute by auctioning a home in the street,” says Samantha Anderson, Deal Core’s resident economist and property auction specialist. “Worst of all, if the signage company put the auction board up at the wrong address by mistake, I get very angry calls from the owners,” adds Samantha.
Why is there a stigma attached to auctioning your home? The short answer is because of the history of why homes would be auctioned. The immediate conclusion is that the owners are in some kind of financial crisis and need to sell urgently.
This perception works very well in favour of the seller because it attracts a lot of attention. The average suburban South African is very used to seeing “For Sale” signs on the verge, but very few see “On Auction” signs.
This immediately gives the marketing campaign a head start and the good news is that any interested buyer has the comfort that the seller genuinely wants to sell.
In addition, the home will go to auction within five weeks from signing the sole mandate, so the buyer will need to make up their mind because time is of the essence. From a seller’s perspective, buyers must qualify to bid on auction and pay a deposit to ensure that they are genuinely committed. This gives the seller the comfort that the sale will not be subject to suspensive conditions and the buyer has the ability to finance the deal prior to bidding for it.
“Auctioning your home does not guarantee a sale and sellers always ask the what if question?” says Samantha. The short answer is your home should sell if it is priced competitively. If your reserve price is not met the highest bid is still presented to the seller for consideration.
“I had a client who placed a reserve of R2.5 million on their home and accepted R1.6million which was the original valuation I proposed to them,” says Samantha. We all want the highest price possible, but that price has to be realistic. Remember, the buyer pays the commission at an auction which is often a factor sellers try to negotiate into the sale price.
You should only consider auctioning your home if you are determined to sell it for a realistic price and happy to enjoy the attention of an “On Auction” sign on your verge. If you just want to test the market and wait to see if someone comes along and falls in love with your home and pays double the going rate for your street, then auctioning is not the route you should consider.