Many deals fall through or simply don’t receive any offers when a property, residential or commercial, is marketed in the conventional manner for a number of reasons. Some of these include: Zero money down so no real risk to the Buyer if they fail to perform or pull out of the deal Buyers that are not properly qualified at the time they make an offer and this will only be picked up once the offer is sent to the bank or bond originator for intensive credit checking No sense of urgency for Buyers and too much time means a decision can be deferred indefinitely. Limited on the ground marketing as most Estates and complexes only allow a single “For Sale” board that can only be outside the complex on a Saturday & Sunday and must then be removed during the week.
How auctions work
An auction sale is not just for distressed properties and in Australia and many other countries auctions are the “conventional manner” in which properties are sold all around the country. Here’s how it works:
I will meet with the Seller and do extensive research to determine the real market value, largely based on a comparative assessment of current similar properties on the market. Buyers simply want value for money and overpriced properties just don’t sell. A reserve price is agreed to and an exclusive mandate is accordingly signed with the auction date being within 30 days of the mandate being signed. We have immediately created urgency with a date and time that this property will be “going, going, GONE”. An extensive marketing campaign is devised and agreed to and a marketing budget is set. Ideally www.ryansrealty.co.za will contribute about 65% of the marketing budget and the Seller about 35%. This normally amounts to a contribution by the Seller of between R3k & R6K for a residential home and between R5k & R10K for a commercial property. All Auction properties get the following intensive marketing campaign for at least 3 weeks and this is how the marketing budget is spent. I’m using 15 San Luca, 5 Grosvenor Road, Craighall Park going on auction this weekend as an example: Auction specific listing with fantastic write up and supporting documents button that includes a detailed auction pack https://www.ryansrealty.co.za/property/Apartment-Flat-for-sale-Craighall-Park-Johannesburg-256 see the “additional documents” button directly below the photos next to “video” button 3D Matterport virtual tour. Here’s how that looks https://my.matterport.com/show/?m=gDx7rPqCK25&sr=-2.71,1.36&ss=2 Professional HD photos and Video Tour R 02417 Facebook campaign Google Ad word campaign Prime exposure, Featured listings and highest ranking on www.ryansrealty.co.za www.property24.com www.privateproperty.co.za www.gumtree.co.za www.sahometraders.co.za https://property.mg.co.za 20-40 Portrait style Streetpole A1 boards created and authority stickers purchased so the Local council doesn’t remove the boards 20-40 Landscape A1 Boards placed on the ground at strategic high traffic points at various intersections in the immediate vicinity and surrounds. Prior to the Auction date, viewings are arranged for interested buyers that enquire and offers can be taken prior to the auction date. The huge advantage here is that if an acceptable offer is made prior to the auction that the Seller is willing to accept and the Buyer wants to make sure they don’t lose the property then they sign a private treaty agreement, which is similar to the Auction Sale Agreement, then a 10% buyers commission and 5% deposit is payable immediately – this is real commitment, so no “tire kickers” If the property goes to auction then if the reserve price is reached on the fall of the hammer, the Bidder signs the Auction conditions of Sale Agreement, then a 10% buyers commission and 5% deposit is payable immediately into the Auctioneers Trust account and guarantees are delivered within 30 to 60 days, depending on the Rules of the Auction. If the Reserve price is NOT met on the auction then on the fall of the hammer, the Bidder signs the Auction conditions of Sale Agreement, the 10% buyers commission and 5% deposit is payable immediately and the Seller has 4 business days for confirmation. This allows a few days for the Auctioneer to negotiate terms and potentially commission to make the deal work for both parties. Once the Seller agrees within the confirmation period then the sale proceeds and guarantees are delivered within 30 to 60 days, depending on the Rules of the Auction.
If you are a serious seller and are looking to sell within 30 days then please contact us to discuss your specific needs. I hope this information was helpful. Please visit www.ryansrealty.co.za and click on “Auctions” to see examples for yourself.
Article written and composed by Ryan Van Heerden, CEO