Property Auctions have become a popular means of selling commercial and industrial properties in South Africa where the Australian model of multiple property auctions has been adapted with great success. Commissions are usually 10% and payable by the buyer as opposed to private treaty sales where the commission is payable by the seller and ranges from 2% to 5%.

Guy de la Porte, an independent property broker, says they are not. The massive amount of advertising, expensive venues and theatrics that the multiple property auction companies employ don’t come cheaply.

It’s not that the auction companies that are charging to much, the “traditional” “private treaty” broker charges too little. Private treaty brokers need to work on sole mandates with an obligation to advertise and market the property – then they can charge higher commissions but they will be expected to deliver results within the mandate period. “It’s crazy that private treaty brokers often work with no mandate do no marketing on the property, then complain when their commissions are driven as low as 2%”.

Broker’s should not see auction companies as opposition but rather should work with them and partner with them in marketing properties that suit auctions. These are usually scarce and highly sought after, unique properties with highly motivated sellers.

There are many buyers and sellers that would never entertain auctions and there will always be a place for the professional specialist commercial and industrial property broker.

Serious commercial property investors prefer private treaty acquisitions where they can negotiate the purchase of commercial properties and have time to arrange finance and do the proper due diligence needed.

Many, are the purchasers that have overpaid for property in the heat of the moment at a multiple property auction. Sellers have benefited from inflated prices in the past and that’s why multiple property auctions have become so popular. Auctions simply work better in a boom market, but they also get a quick sale in a down market, providing that the reserve is keen.

Single property auctions are coming back in a big way with smaller auctioneers charging commissions similar to those charged by private treaty brokers. Most buyers feel more comfortable when it comes to single property auctions as they are not lost in a huge crowd of people and they can see who they are bidding against.

Guy de la Porte has sold a number of properties through joint ventures with auctioneers, including:

Coppoolse Findlayson Factory in Kenwill Street Brackenfell for R15 Million

Rhomberg Electronics , 17 Montague Drive for R17.5 Million

Greenwich Place, 1 & 2, Capricorn Crescent Capricorn for R2.5 Million

Old Mutual Building, 240Main Rd Tokai for R14 Million