Online auctions will be increasingly popular post lockdown
With property markets around the globe significantly impacted by the Covid-19 pandemic, online auctions are proving increasingly popular among buyers and sellers of properties across the various sectors of the market, says MC du Toit, CEO for BidX1 South Africa.
“While these unprecedented times and the lockdown have brought some changes and enhancements to our model, being an established online auction platform has meant we have been able to continue trading and have in fact seen an uptake in buyer interest and activity, including more cash buyers, with more people viewing properties online and even purchasing unseen. This includes a property in KwaZulu-Natal which recently fetched R1.02 million from an opening bid of R800 000.
“In South Africa, we are receiving bids from across the country as well as internationally from America, the Netherlands, Dubai, Germany, Singapore and Nairobi, with interest from various other countries. Globally, BidX1 has been able to transact and sell properties in Spain, Cyprus, Ireland and the UK to buyers from around the world.
“While at present it’s not ‘business as usual’, the fact is that those businesses which operate online will remain at the forefront post lockdown as the way of doing business has changed overnight, as this has become the ‘new normal’. We believe that the auction method of sale will now, even more than before, be the most effective method of sale for any property.
“The fact is technology has never been more important for our industry, enabling us to adopt to more agile and secure ways of working while delivering results for our clients and bringing investment opportunities to the market.”
Du Toit says for buyers and sellers, the online auction method has gained traction both globally and locally, resulting in sales being concluded quickly and with no strings attached, namely, no restrictive conditions.
“It has not been uncommon for BidX1 during the past few auctions to see as many as 90 bids on one property alone. Buyers are also pushing prices up – at our most recent auction, a one-bedroom apartment in Century City, Cape Town, with no reserve price, drew 25 bidders, finally selling for R1.46 million, which was a fair, market-related price, and actually more than was expected given the uncertain times we are currently experiencing.”
Du Toit’s advice to sellers is when a fair offer is presented, it should be considered, with the best offers being unconditional. “I would advise against listing a property at a high price and then negotiating down, but to rather list the property at an opening bid, get buyers involved and negotiate the price upwards. If this is done correctly, the seller will achieve the best result.
“For buyers, savvy property acquisitions are good investments and in the current volatile economic environment increasingly so. There certainly is no better time to buy.
Online private treaty bidding
“While online auctions remain our core business, our platform also includes a section where buyers can make direct offers before an auction date has been set. This is via the ‘private treaty’ tile on our website, which allows for buyers to make offers immediately on a property. Should buyers make a fair offer before an auction date has been set, the property does not need to go to auction and can therefore be sold immediately through the platform. As a result, this is a user-friendly property marketplace where buyers and sellers can transact effortlessly.
“This is a trend we expect to continue post-lockdown. We are seeing brisk activity in the private sales market and sellers enjoying increasing success, with unconditional offers presented to sellers and in some instances, bids received exceeding the reserve price. As with auctions, this transparent method of online sale allows the seller to determine the true market value as buyers are competing against each other for the property.”
Du Toit says naturally, buyers want to transact at a price level that they feel comfortable with. “On the BidX1 online platform they can do exactly that. Whether via private treaty or auction, they are able to see all other bids as they come through. While it is a bit early to tell what buyer sentiment will be post-lockdown, what is certain is that serious buyers are definitely willing and able to transact.
“As a result, we anticipate that post-lockdown will only see more activity and the way to buy property will certainly change. We have seen in all markets that buyers are viewing more properties and that they are comfortable in investing.”
Adds du Toit: “While it’s difficult to predict what prices will do after the lockdown has ended, price has always been determined by demand and supply. My advice to both buyers and sellers is that the best way to determine a fair value on a property will certainly now be auction. If buyers are competing for the same property, that will give you as the seller a fair reflection of value.
“For distressed sellers, we provide the seller with valuable data that they would not normally have access to, which will assist them in making informed decisions. In these times, it is important to have data access as comparative sales are no longer a reliable way to determine the value of your property. Instead, the value will need to be determined by interest and competition. This is why our platform provides sellers certainty by way of data in a time where past sales cannot be taken as a reliable measure of value.
“This is why we emphasise transparency and information. If all the information is available to buyers and sellers, the decisions that clients make will be informed and not just based on a sales pitch.”