Auctions not the best way to achieve a true selling price for your residential property, says Mike Greeff

Since the start of the recession South Africa’s auction groups have significantly increased the number of residential homes that they sell – and they have recently been pushing hard to increase further their share of this market.

“One of the tactics resorted to in their advertising campaign,” said Mike Greeff, CEO of Greeff Properties, “is to advertise boldly that if you buy through them you need pay no commission and no deposit (provided you work through a company that will guarantee your deposit - and obviously a fee would then apply). The plain truth, however, is that auctioneers do charge commission to the buyer and in most cases the seller pays the marketing costs. Commission is usually in the region of 10% - far higher than the fees charged by estate agencies.”

It is also true, said Greeff, that in most cases homes sold by auction go for 15 to 25% less than their true market value.

“Even in these tough times while the prices obtainable are up to 15% down on the peaks of late 2007, we are seeing that the prices achieved by the auctioneers are way below that which a reputable estate agency would manage to achieve within ten to twelve weeks of being awarded the mandate.”

Buyers attending auctions, said Greeff do so expecting to get a bargain price – “and all too often they do get it, which does not bode well for the seller”.

“The auctioneers target market, essentially covers those who are financially stressed and desperately in need of a quick sale – and in concluding a sale they are usually doing the seller a huge favour, but for the realised price”

“It has to be recognised, however (and there are a number of examples of this) that there is no better way to obtain a fair market related price than by using a recognised estate agency. “The time, care and personal attention that a real estate agent gives every buyer, is a sure way to achieve a true and representative price for a residential property.

“An auction is a quick-fix alternative which, while often essential, should only be used as a last resort. If a home does not sell on auction, the free market price seldom gets above the final bid price, which unfortunately becomes known to all, post auction.” says Greeff.

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