Property auctions – from start to end
What you should know– Part 3
One of the reasons why members of the public in general are reluctant to buy on auction is that they are uncertain as to how the bidding processes works, what costs are associated with the auction, and how the consumer is protected. Pieter Geldenhuys, CEO at national auction house Bidders Choice, explains this process.
Q: How does the bidding process work?
PG: Any auction in South Africa works ‘BY THE RISE’. This means that the auctioneer has the sole right to regulate the bidding procedure. The auctioneer will announce the bid increments while he is busy auctioning, and will also call for bids during the auction process. The most important decision for an auction buyer to make before the auction starts is what the maximum bid is that she is prepared to offer during the auction. More important is that, as an auction buyer, you must NEVER EXCEED what you were prepared to pay for the property or movable asset on the outset.
In many instances properties or assets are being sold subject to confirmation. This mean that the seller will either confirm or reject the offer on auction. The confirmation period might vary from one hour to 21 days after the auction. The confirmation period will be specifically indicated in the conditions of sale. Many insolvency and liquidation sales are also subject to the consent of the Master of the High Court.
Q: How do I know if there are any hidden costs?
PG: The auctioneer will always be aware of any other hidden or extra costs, which he should announce before the auction. Should extra costs arise after the auction and these have not been dealt with before the auction, then a buyer can declare a dispute.
Q: When is my final payment due?
PG: Final payment is due immediately when signing the conditions of sale after the fall of the hammer.
Q: When will the property be transferred into my name?
PG: The property will be transferred as soon as possible into the name of the new buyer. The process is exactly the same as buying a property from an estate agent. All the clearances must also be acquired and adhered to. A normal property transfer process takes six to eight weeks.
Q: How am I as consumer protected?
PG: The Consumer Protection Act (CPA) is specifically drawn up to protect consumers across the board. Buyers can refer to the act.