Nah, we're not desperate sellers
Most upmarkert properties are on auction for "convenience, not distress" - sellers.
In the current market, trying to sell a property is hard enough as potential buyers cannot get home loans from banks.
As a result, many properties sit on the market for longer and at times, the sellers resort to renting them out rather than settling for less than their asking price.
Auctions it would seem are becoming the trendiest and quickest method of selling property.
Recently, the Alliance Group reported an increase of ultra-luxury homes being forced into distressed property sales channels thanks to the economic crisis.
Wealthy suburbs such as Sandhurst, Clifton and Hyde Park were said to be no longer immune to the downward correction in house prices, according to the Alliance Distressed Asset Index for the first quarter of 2009.
Rael Levitt, chief executive officer of the Alliance Group told Realestateweb.co.za this week that these luxury properties are still coming through to the auction market.
Levitt noted that there has been no drop in asking prices for these upmarket properties, but there has been an increase in sales activity lately.
Asked whether owners in wealthy suburbs resort to auction because they cannot afford to wait for their house to be sold by an estate agency, Levitt said top-end properties come through to the auctions because this method of selling is quicker and is a good barometer for measuring market value.
In fact, more people are turning to auctions because of great values being achieved and for convenience, he added.
Sandhurst - probably South Africa's poshest residential suburb and almost certainly the most sought-after address in Johannesburg - has seen a spate of properties being auctioned and, later this month, there are more properties in Sandhurst to be auctioned by new auction company, Savile Row Auctions.
Mark Kleynhans, managing director of Savile Row Auctions, said his company does not believe that affluent owners are selling on auction largely because of financial pressure.
Talking about the properties in Sandhurst, he said owners elected to auction as they are aware of benefits of the auction process. "In the current market conditions, auction is the best process to sell property."
According to Lightstone, Sandhurst is ranked number one suburb nationally with a mean valuation of R13m for freehold homes.
Buyers may be disappointed to learn that many of these residential auctions have few bargains as some sellers are still overpricing their properties, said Auction King auctioneer, Garth Botton.
Botton argued that although auctions are becoming a popular way of selling property, buyers still need to be educated on how auctions work and what to expect.
There are some sellers who unrealistically price their properties, making it difficult to always snap up bargains. Bargains are to be mostly found when a property being auctioned has been repossessed.
He too said selling an upmarket property the auction route does not mean the owners are battling financially.
What happens is that because these luxury properties are well-furnished and are family homes, owners would rather sell the property quickly rather than putting their houses on show several times without getting results.
For these owners, auctions are about a quick and convenient method of selling and some have realised that estate agents are sitting with too much stock which is not selling, he said.
When a property is priced right, it sells quickly. What is often difficult is to auction a property that has been on the market for a while and never sold.
The auction arena is booming and potential buyers should attend auctions and get a sense of what happens, he said.
Article by: Denise Mhlanga - www.realestateweb.co.za