It is incredible how quickly an industry can evolve. If you asked property investors ten years ago if they were confident in buying and selling real-estate via the auction mechanism, the answer would have been a very abrupt ‘Absolutely not.’ They may have considered the prospect but then contacted their local estate agent instead. That is of course how their parents did it, and theirs and maybe even theirs. But times are a-changing and purchase and sale by auction is taking the property market by storm. Today, auctions have become a preferred method, especially in the commercial sector.
What makes the auction mechanism so attractive and successful? Sale by auction is not only a fascinating event, often filled with drama and excitement, but it also provides a transparent trading platform and investors realise the numerous benefits and advantages this brings. Deals are done in the open on the auction floor. It’s a quick, efficient and uncomplicated means of buying and selling property, and there are no back and forth negotiations or deal breakers.
In London there are auction companies selling up to 500 houses a day and in the USA, auction companies can sell up to 5,000 houses at one mammoth auction sale. The sales are quick and efficient. Australia is no different; a staggering 85% of real estate property is sold on auction down under. The main reason for this increase is that the price of property achieved at auctions is a real-time and true barometer of current market values. The competitive auction environment invariably secures a realistic market price and there’s always the chance of a bargain.
While auctions were once viewed as a last resort mechanism producing weak results, they are now a first choice method of sale producing record breaking results.
The reason why auctions are fast becoming the preferred method of transaction in bull or bear markets, is that auctions, much like the stock market, are the point where supply and demand meet. Over recent years there has been a sharp increase in the number of commercial properties sold on auction where major institutions, property funds, and sellers utilise the method as a means of sale. Recently, some of the country’s largest commercial properties have been coming under the auctioneer’s gavel – unheard of six years ago.
Don’t miss Auction Alliance’s upcoming national auctions:
o Durban, August 17 at the Oyster Box Hotel, Umhlanga Rocks
o Johannesburg, August 18 at the Grayston Southern Sun, Sandton
o Cape Town, 19 August 19 at the Crystal Towers Hotel & Spa, Century City