It’s tough, but don’t expect to pick up a cheap house

Like the rest of the economy, the climate for auctions has taken a noticeable turn for the worse. “They’re quieter, times are tougher, prices are down — and that applies to everything,” says Aucor’s Eddie Winterstein. Bill Hartard, a partner in Segoale Property Mart, which specialises in fixed property auctions, agrees, adding: “ House prices are down on last year; they’re about the same as they were in 2006.

“There isn’t much difference between the numbers who attend auctions this year and last, but there is a difference in their make-up; most people who bid at auctions this year aren’t people looking for homes to live in, they’re investors.”

Many who are looking for homes to live in attend sheriff’s sales in the mistaken belief they will be able to pick up a house for peanuts, because, they reason, everything must be sold, and without reserve, because they’re sales in execution.

The truth is it’s a rarity if one is really knocked down to the public.

“You can bet if one is knocked down for a low price, it was knocked down to the execution creditor, probably a bank,” says Hartard.

“Sheriff’s sales are sales in execution of a court’s judgment; that’s why they’re called sales in execution,” he explains.

“They are always without reserve, which is why, to protect their assets from being sold for very low prices, execution creditors must and do attend them.

“You can be sure it was knocked down to the execution creditor if, for example, the highest bid on a house on which he has a R1-million bond was R100000.”

The belief that peanuts is currency at a sheriff’s sale has been doing the rounds for years, and has probably gained strength recently because of the increase in houses repossessed by banks, known as properties in possession (PIPs), which are invariably auctioned at sheriffs’ sales.

Those who buy the peanut story reason that banks are reluctant landlords and, because of the number of PIPs on their books, they will let them go for substantially less than their market value.

That happens occasionally, but only when they have been so badly damaged and neglected that that’s probably all they’re worth.

Looking at the week ahead and beyond, and bearing in mind that June 16 is Youth Day, there is a lull in property auctions this week and in the number of sales to be conducted in the week starting June 22.

On June 25, starting at midday, BidLine will auction nine commercial properties at the Southern Sun Grayston in Sandton; and Van’s Auctioneers will sell a Westonaria shopping centre, on the corner of McGregor and Forbes streets, at 11am on June 25; at noon on June 23 in the Vineyard Hotel in Newlands, Cape Town, the Alliance Group will auction 8400m2 of industrial land in Capricorn Park in the Southern Peninsula; and on June 25, at 11am, this time in the Durban Country Club, Alliance will auction the Bonamanzi Game Reserve in Hluhluwe, KwaZulu- Natal.

At the Inanda Country Club, starting at 10.30am on June 24, Aucor will conduct a large property auction, a feature of which will be the “recently remodelled” 32-floor Mariston Hotel, a Johannesburg landmark; a hotel site in Morningside, and five guesthouses, three of which are claimed to be four-star.

On another tack; on June 18, starting at 10.30am, Park Village Auctions will conduct “a clearance sale of yellow metal, plant and equipment, trucks and trailers and other heavy capital equipment” at their truck yard, Nasrec Showgrounds’ new entrance, next to Gate 2, Rand Show Road, Johannesburg South.

On yet another tack: at 10.30am on June 18 at Rand Airport’s Hangar 28, Germiston, Aucor will sell repossessed helicopters and aircraft. Among them are an airworthy Fairchild Metroliner, two Hawker Siddeley jets and two Saab 340Bs that aren’t airworthy, a Robinson R44 helicopter and a Robinson R22 helicopter, both of which, it is claimed, are “in excellent condition”.

Article by: David Pincus - Business Times -