How successful is selling your property on auction?
How successful is selling your property on auction?
David Pincus looks at the strike rate and average sale price.
2011 may not have been the sparkling year some big property auctioneers hoped for - but don’t cry for them - the drop wasn’t major. That didn’t apply to all. Some even claimed their 2011 figures eclipsed their 2010 figures.
The Claremont Auction Group, a major auctioneer in the Western Cape, auctioned 850 properties in the Western Cape in 2010, and 1 100 in the same region in 2011.
Its success rates in both years was 60%, according to Jonathan Smiedt, the group’s CEO.
Rael Levitt, CEO of Auction Alliance, arguably the biggest auctioneers in the country, which auctioned 4 768 properties nationwide in 2011, says, “our success rate dropped from 67% in 2010 to 63% in 2011”.
Within a percentage or two both sets of figures are probably close to many major auctioneers’ success rates. “But,” says Smiedt, without divulging where he got the figures from, “23% is the industry’s success average.”
Some auctioneers claim better sales success percentages, because like Park Village Auctioneers (PVA), which claims a 90% success rate, they will only put properties under the hammer they can almost guarantee they will be able to sell at prices their sellers will accept.
PVA’s director Roy Lazarus, says: “we reject 68% of the properties we’re offered because the sellers’ prices are unrealistic.”
Auction Alliance and ClareMart’s figures are probably a reasonable reflection of the auctioneering industry’s performance in the property sector.
Regretfully, it isn’t possible to paint an accurate picture of the entire auctioneering industry’s performance, because unlike the automobile industry’s representative body, the National Association of Automobile Manufacturers of South Africa (Naamsa), which collects and correlates sales statistics and issues accurate monthly reports, the auctioneers’ representative body, the SA Institute of Auctioneers (Saia), doesn’t.
It’s an open secret that demand for homes in the Western Cape is growing. Smiedt says there was an even split between commercial and residential properties auctioneers sold in 2010. “However, in 2011 there was a shift in the market, towards the residential property market, which accounted for 63% of the (Claremart) group’s sales.”
He claims the average selling price his group achieved in the residential market last year ranged between R2m and R4,1m, and attributes the fall-off in activity in the commercial and industrial market to “less buoyancy in industry and commerce, due to the global recession, and commercial property owners being unwilling to accept market-related prices achieved on the auction floor”.
Auction Alliance differed. It found there was strong demand “for high value, well let and well located commercial and industrial properties priced between R20m and R30m. “The middle residential market was quite tough; the entry level market, below R1.5m was the easiest. Upmarket houses above R5m were the most difficult to sell.”
These prices are significantly more than the national average nominal prices quoted for 2011 in the Absa Property Index. It states that small homes of between 80m2 and 141m2 went, on average, for R884 400, medium sized homes between 141m2 and 220m2 for R985 400, and large homes, between 221m2 and 400m2 for R1 548 200.
Absa’s average prices, which include prices of homes sold by auctioneers and estate agents, are virtually give-aways when compared with some of the prices Auction Alliance, for example, achieved last year. Like R45m for a house in Sandhurst, Johannesburg, where, says Levitt, “the average value for a house is R45m.
“We sold a flat in Mouille Point, Cape Town, for R46m, the average value for apartments along the popular Atlantic seaboard then was R5.6m.
Quoting prices closer to Absa’s average prices, he notes that, “on the East Rand we sold more than 320 houses for prices exceeding R1.05m.
“Fully let commercial properties with yields of between 8% and 9%, were sold at average prices of R9.5m. The highest prices were achieved in the retail sector, where the Lonehill and BelAir Malls in Gauteng were sold in 2011 for R720m.”
Levitt and Smiedt agree on one point, that is, as Smiedt puts it: “auctions are increasingly becoming the first choice of fixed asset disposal and acquisition in the private sector.” But they cannot prove that claim without accurate statistics.
Summing up 2011, Levitt says: “Our sales exceeded R6bn. The greatest challenge for the auction industry in 2010 and 2011 was attracting buyers who rebelled against having been over-supplied with non-income producing and distressed properties.
“Economic headwinds, and low interest rates, did little to boost sentiment. However, despite feeble demand, Auction Alliance sold more than R350m worth of failed developments in 2011.
”Office block sales were strong in the first two quarters, compared to 2010, but there was a stabilisation in enquiries by year-end.
“I foresaw the commercial market as being one of Trophy and Trauma. Our outlook remains unchanged. A spate of new JSE property listings will accelerate demand for cash-producing property.”
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David Pincus looks at the strike rate and average sale price.
2011 may not have been the sparkling year some big property auctioneers hoped for - but don’t cry for them - the drop wasn’t major. That didn’t apply to all. Some even claimed their 2011 figures eclipsed their 2010 figures.
The Claremont Auction Group, a major auctioneer in the Western Cape, auctioned 850 properties in the Western Cape in 2010, and 1 100 in the same region in 2011.
Its success rates in both years was 60%, according to Jonathan Smiedt, the group’s CEO.
Rael Levitt, CEO of Auction Alliance, arguably the biggest auctioneers in the country, which auctioned 4 768 properties nationwide in 2011, says, “our success rate dropped from 67% in 2010 to 63% in 2011”.
Within a percentage or two both sets of figures are probably close to many major auctioneers’ success rates. “But,” says Smiedt, without divulging where he got the figures from, “23% is the industry’s success average.”
Some auctioneers claim better sales success percentages, because like Park Village Auctioneers (PVA), which claims a 90% success rate, they will only put properties under the hammer they can almost guarantee they will be able to sell at prices their sellers will accept.
PVA’s director Roy Lazarus, says: “we reject 68% of the properties we’re offered because the sellers’ prices are unrealistic.”
Auction Alliance and ClareMart’s figures are probably a reasonable reflection of the auctioneering industry’s performance in the property sector.
Regretfully, it isn’t possible to paint an accurate picture of the entire auctioneering industry’s performance, because unlike the automobile industry’s representative body, the National Association of Automobile Manufacturers of South Africa (Naamsa), which collects and correlates sales statistics and issues accurate monthly reports, the auctioneers’ representative body, the SA Institute of Auctioneers (Saia), doesn’t.
It’s an open secret that demand for homes in the Western Cape is growing. Smiedt says there was an even split between commercial and residential properties auctioneers sold in 2010. “However, in 2011 there was a shift in the market, towards the residential property market, which accounted for 63% of the (Claremart) group’s sales.”
He claims the average selling price his group achieved in the residential market last year ranged between R2m and R4,1m, and attributes the fall-off in activity in the commercial and industrial market to “less buoyancy in industry and commerce, due to the global recession, and commercial property owners being unwilling to accept market-related prices achieved on the auction floor”.
Auction Alliance differed. It found there was strong demand “for high value, well let and well located commercial and industrial properties priced between R20m and R30m. “The middle residential market was quite tough; the entry level market, below R1.5m was the easiest. Upmarket houses above R5m were the most difficult to sell.”
These prices are significantly more than the national average nominal prices quoted for 2011 in the Absa Property Index. It states that small homes of between 80m2 and 141m2 went, on average, for R884 400, medium sized homes between 141m2 and 220m2 for R985 400, and large homes, between 221m2 and 400m2 for R1 548 200.
Absa’s average prices, which include prices of homes sold by auctioneers and estate agents, are virtually give-aways when compared with some of the prices Auction Alliance, for example, achieved last year. Like R45m for a house in Sandhurst, Johannesburg, where, says Levitt, “the average value for a house is R45m.
“We sold a flat in Mouille Point, Cape Town, for R46m, the average value for apartments along the popular Atlantic seaboard then was R5.6m.
Quoting prices closer to Absa’s average prices, he notes that, “on the East Rand we sold more than 320 houses for prices exceeding R1.05m.
“Fully let commercial properties with yields of between 8% and 9%, were sold at average prices of R9.5m. The highest prices were achieved in the retail sector, where the Lonehill and BelAir Malls in Gauteng were sold in 2011 for R720m.”
Levitt and Smiedt agree on one point, that is, as Smiedt puts it: “auctions are increasingly becoming the first choice of fixed asset disposal and acquisition in the private sector.” But they cannot prove that claim without accurate statistics.
Summing up 2011, Levitt says: “Our sales exceeded R6bn. The greatest challenge for the auction industry in 2010 and 2011 was attracting buyers who rebelled against having been over-supplied with non-income producing and distressed properties.
“Economic headwinds, and low interest rates, did little to boost sentiment. However, despite feeble demand, Auction Alliance sold more than R350m worth of failed developments in 2011.
”Office block sales were strong in the first two quarters, compared to 2010, but there was a stabilisation in enquiries by year-end.
“I foresaw the commercial market as being one of Trophy and Trauma. Our outlook remains unchanged. A spate of new JSE property listings will accelerate demand for cash-producing property.”
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