A change in mindset in recent years has seen property sales via online auction enter a new era, according to MC du Toit, CEO of Sales for BidX1 South Africa.
“Based on current trading conditions, I believe that the time for wait-and-see is over, which is borne out by the general feeling in the market – both buyers and sellers are starting to make decisions and acting on what is available, says du Toit.
“Online property auctions are now seen as a highly effective sale method which can achieve a good result quickly. Naturally, given where we currently find ourselves economically in South Africa, we are seeing distressed sales, but the other main reasons for selling include ‘trading up’ and ‘semigration’. While this has been a topic of discussion for some time, we are still finding that a big motivation for selling is to purchase a better property than the one the seller currently owns, or to relocate to a different area or region in the country.”
Du Toit says many sellers choose online auctions because of the speed and efficiency provided by this method of sale. “These are committed sellers who are seeking ready-to-go buyers, which is why I would advise those buyers to make an offer for consideration and take advantage of the ease and transparency that the online process brings. Sellers are keen to consider offers, so don’t make the mistake of assuming that yours will be rejected – or if the property is on auction, that the bidding will go too high. In my experience, this misconception keeps some buyers from even submitting an offer.
“We provide a simple ‘Make an Offer’ button on our website which allows buyers to present the seller with their offer quickly and easily. If the seller is happy with that offer, the property can be sold immediately through the platform and does not need to proceed to auction. Online methods provide this level of convenience and flexibility. Meanwhile sellers see the strong results being achieved via this modern approach - technology, coupled with industry expertise, will ultimately yield the best outcomes. This is a global trend and South African sellers are no different.
“At the same time, I have always believed that there is no specific time that is the ‘best’ time to sell. If the price of the property is correct, the property will sell whether we are caught in a heat wave or a blizzard so if your price is market related, it will sell. That said, we have noticed that seasonal months like spring and summer have produced more buyers.”
Du Toit says an often-asked question is when is the right time to buy? “This is determined by affordability and price. Affordability is unique to the buyer and their own personal circumstances, but pricing is market driven. Pricing at the moment is attractive for buyers and could remain that way for some time. Buyers are aware of this – hence the level of interest at our recent February (2022) auction.
“With more than 50 participating bidders, we received over 230 bids in just a few hours, across 20 properties. The total value of bids placed came in at over R50 million, so there was plenty of additional liquidity available. Those ‘underbidders’ are seeking to part with cash in a market where they perceive good value.
“Among recent transactions, we sold a property in Zevenwacht in the Western Cape Winelands for R2.6 million, while a farm in Limpopo sold for R20 million. On our February auction, we sold a 16-bedroom guesthouse in Mafikeng for R3 million after it attracted more than 20 bids. Our model is completely transparent, so you can actually see the bids coming through in real-time.
“We have certainly seen increasing confidence in the online process, with a notable increase in activity on the platform. Once people start the process, they gain confidence, evidenced by the fact that 92% of those who registered with us for the February auction took part in bidding on the day, which reveals we have a very engaged buyer community on the platform.
“Encouragingly, we also have a high proportion of repeat bidders – over 20% across the platform in 2021. Furthermore, in South Africa, we have bidders who are securing 80-100% bonds or finance on the properties that they buy, so we have a heathy mix of buyers, not just cash purchasers.
“We’re also seeing increasing interest from international buyers. As they can complete the entire transaction online – and also view investment opportunities in multiple markets – the BidX1 platform is very popular with such investors. When it comes to our South African properties, we’ve seen the most interest from Saudi Arabia, Germany and the United States.”
Du Toit says that buyers have nothing to lose by placing a bid. There is no cost as registration deposits are fully refundable, and the entire process is online so you can bid from the comfort of your home, office or wherever you are, which is a huge shift from the more intimidating atmosphere of traditional auctions.
“Auctions are also a popular option for those selling unique, specialised or luxury assets, as it allows them to gauge market interest for the asset in question, which is all the more reason to present an offer which the seller may wish to accept.”
Adds du Toit: “Positively, in the commercial market, we are seeing increased demand for office space and also an uptake in retail. This does not mean that the industrial sector has been slow, but rather that the other two markets were negatively impacted by the pandemic far more significantly than the industrial sector, and they are now starting to show recovery.
“The fact is that the industrial sector will always be resilient as it caters for clients with specific needs. For example, from an owner occupier’s perspective, if you require a certain type of warehouse space for your business, you are motivated to seek that space, regardless of market trends.
“Looking at the year ahead, naturally everyone is seeking value for money, regardless of when they purchase. There is certainly value in the market at the moment, so buyers have nothing to lose by making an offer. For sellers, although selling a property is traditionally associated with stress and uncertainty, much of this can be alleviated – now more than ever – by choosing an agent that will harness technology in your favour. If interested parties can make an offer online, quickly and easily, from anywhere in the world, and you can close transactions digitally, that’s going to increase your chances of getting the best price. Not to mention that hard data is crucial for making beneficial pricing and marketing decisions.”
Writer: BidX1 South Africa