Value buys to be had through online property auctions

● In the current economic climate, opportunities abound for value-for-money property acquisitions, especially for those prepared to do their homework and consider all options, including bank sale properties on auction, said MC du Toit, CEO of BidX1 SA.

So what are bank sales and does this mean there are bargains to be had?

Said Du Toit: “More accurately, one would refer to these as forced sales, which means that legal proceedings have compelled the owner to sell, and this can be by way of liquidation, insolvency, court order or sale in execution. Then there are also deceased estates and divorce settlements, which are handled a bit differently from liquidations.

“You also get a bank instruction, which is when a bank has ‘bought in’ a property at a sale in execution and is now the owner of the property and which then instructs an auctioneer to proceed to sell the property by way of auction.

“In addition, there are bank-assisted sales, which is when the property owner has defaulted on his or her bond repayments a few times and the bank and the debtor come to an agreement in terms of selling the property before legal action is implemented.”

Essentially, the selling process remains very similar, with a few small exceptions in certain instances, Du Toit said. For example, in the case of a deceased estate, the sale will require the consent of the executor and in some cases the master of the court, and this then becomes a condition of the sale. In most legal instructions, the sale will need to go through certain procedures to be confirmed by a specific party, whether it’s the trustee in an insolvent estate or the bank.

What should buyers look out for when they are considering buying a forced sale property via online auction?

Firstly, read and fully understand the conditions of sale and rules of the auction. “Ensure you have inspected the property and if you are not in a position to do so, ensure you are aware if vacant occupation will be provided by the person authorised to sell the property, or if that is not guaranteed. Bear in mind that you are buying the property as is, or voetstoots.

“Then, while it seems obvious, buyers must make sure that they know what they can afford, and set their own price limit when bidding. If you have any questions, contact the auctioneer. We always assist buyers through the entire process and can be contacted regarding any questions. I always encourage buyers to rather ask the question than be unsure of anything.”

How do you know when you have the opportunity to buy a “bargain property”?

“Quite simply, if you acquire the property for less than you were willing to pay for it. This underlines the importance of thoroughly carrying out due diligence and knowing what price properties achieve in the area before you bid on the auction.

“Also, check what comparative properties are being marketed at and then weigh up what you are prepared to pay for that particular property. If you decide that you are prepared to pay, say, R2m for a property and if you get it for R1.7m or R1.8m or even R1.9m, you have bought a bargain.

“And if your due diligence tells you that you would have been prepared to bid up to R2.2m, then you have truly acquired a real bargain.

“There are definitely numerous opportunities to make sound acquisitions in terms of forced-sale properties, as long as you pay attention to all the above factors.”

But be prepared to do your homework first