The ins and outs of an auction

The recent accusation pertaining to Rael Levitt payouts and bribes to liquidators, bank staff and lawyers got tongues wagging regarding auctioning.

Rael Levitt, who has offered to step down as a board member of the SA Institute of Auctioneers (SAIA), is being investigated for allegedly paying people to coerce up the amounts other bidders were prepared to pay at property auctions. The investigation is conducted by the Consumer Protection Commission and the Estate Agencies Affairs Board.

Three rules for first-time auction-goers
Darren Winterstein, Managing Director at Aucor, offers the following rules for buying assets on auctions:
1. Attend as an observer and get a feel for the method and the auction.
2. Do your homework. Know what you want to buy, what it's worth and what you are prepared to spend. It’s very easy to get caught up in the excitement and sheer adrenaline rush of an auction, and then you end up experiencing a strong case of buyer’s remorse afterwards.
3. If it looks too good to be true, it probably is.

“Many people think of auction property as bank repos and hope for a bargain. But potential buyers must understand what is meant by bank repos, distressed property and other auction properties,” says Winterstein.

How does the auction process work and what you need to know as a first-time buyer
There are certain elements that are unique to property auctions due to the nature and high monetary value of the transaction. Be sure that you are familiar with the following points:
• When buying fixed property, discuss the property with the agent and get a copy of the fact sheet that will give you all the insight necessary to make an effective buying decision.
• Understand prevailing market conditions.
• When you register as a buyer, ask for a copy of the conditions of sale and familiarise yourself with the contents.
• Make your financial arrangement prior to the auction sale.
• Ask the auctioneer and his team any questions you might have before the sale.
• Make good use of viewing days and inspect the property/asset fully before the sale commences.
• Watch, listen, ask and bid only when you feel comfortable to do so.
• While SA law states that all property transactions must be done in writing, there is an exception. Once you have registered as a buyer at a property auction and made a bid, whether verbal or by raising your hand, it is considered binding, even if purchase papers have not been signed.