Buying Property At An Auction

Immovable property Auction is a process where  properties are sold to the public through competitive bidding to the  highest bidder.Sherriff of High Court auctions are more popular in  Zimbabwe were properties are sold due to bank foreclosing or due to any  party to party litigation. In Harare these auctions are usually held at  Ralyton Sports Club. Experienced real estate investors often purchase  properties at auctions. But auctions are not limited to professionals,  first time buyers too can participate in the auctions.

This article will explain the basics of property auctions so you can  decide if this option might be a complementarymode of snatching that  bargain, whether you want to live in the property or just invest in it  to sell again. The most prominent type of Auction is the Reserve Auction  (an auction subject to Confirmation) -in this scenario, thehighest bid  is reduced, in effect to an offer not a sale. The seller reserves the  right to accept or reject the highest bid within a specified time  -anywhere from immediately following the auction up to 72 hours after  the auction concludes. Afteracceptance, there is sale confirmation which  occurs about 14 working days from the date of acceptance of offer.  During that time, the original owner or any interested party may file an  objection to the sale which will be set down and be heard by the  Sherriff of High Court were their ruling will decide the confirmation or  setting aside of the sale. It is also important to note that any  interested party can still take the case further to any superior court.  so some professional legal consultation maybe required for a clear  direction.

Some hints: -

Do your research-  Be sure you read and understand the Auction conditions of sale (Seek  independent advice from a real estate attorney or a knowledgeable real  estate agent).

Drive by the property, if possible-  This will let you see the home’s condition—from the outside Homes in  the foreclosure process are usually occupied by the owner who’s being  foreclosed upon or a renter. Do not trespass or disturb the occupant!  Doing so is a criminal offense.

Get your financing in order- auctions typically accept cash,RTGS bank transfer. A common  misconception with buying property at auction is that you can only  purchase using all-cash/transfer, and this isn’t true. While the speed  of auctions benefits all-cash/transfer buyers, you can still finance a  house at auction through a loan only that before the Auction one should  have the required Security deposit in cash/transfer and a pre approved  loan facility that allows one to immediately pay the purchase price when  required as any defaults will result in forfeiture of the security  Deposit.

Confirm auction details- even on the day of/during the auction. It’s very common for some  properties on auction to be stopped or even canceled for various  reasons.

Register to Bid.  Registration can be done even 7 days before the date of Auction/on the  auction date before the auction starts by depositing with the Auctioneer  the requisite security deposit and buying of a bidder’s card. Doing  this in time allows one to be well prepared on the auction date.

Attend the auction and bid! Check in at least one hour before the auction start. The Auctioneer  verifies each bidder’s compliance with payment of Security Deposit and  registration formalities are done before the auction starts. The  Auctioneer will read out the Conditions of sale and thereafter shares  some brief information about each property and then starts with an  opening bid and only registered participants can place a bid with a  numbered paddle (assigned to them during the registration process).  Raise the paddle when the auctioneer announces a price that you’re  prepared to accept as your winning bid.

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Benefits for Buyers

• Sherriff of High Court Auctions accept all modes of payments such as rtgs bank transfer, cash and pre-approved loan financing
• Smart investments are made as properties are usually purchased at fair market value through competitive bidding
• Auctions offer a range of properties at different price points in the same place at the same time
• Auctions eliminate long negotiation periods
• Buyers know they are competing fairly and on the same terms as all other buyers

Bottom Line
Buying  houses at auction is a unique way to invest in property and has many  benefits and equally some drawbacks such as not being able to view the  house in detail and can have some cost surprisesbut the potential to get  a good property at "fire sale prices" is such a big draw that, for many  people, it compensates for the numerous potential drawbacks.Investing  in a house at auction can benefit short-term investors as well as  long-term investors. By following some of the steps outlined in this  article, you’ll be in a good position to snap up a great, undervalued  property.

Disclaimer: The writer  writes in his personal capacity and the article should not be construed  as Investment advise. Investors are advised to consult their legal  practitioners’/estate agents for guidance.