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.
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.
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.