Online auctions are gaining popularity, but the traditionalists are still sold on the idea of live auctions that guarantee a good show, with emotions and bids running high.
In an industrialized area approximately 30 minutes from Sandton, the commercial hub of Johannesburg, is a shining fleet of trucks, parked and ready to be sold to the highest bidder.
The sun reflects off the windshields in the direction of the registered bidders as they sit under red outdoor umbrellas at the entrance of the property.
Some opt for refreshments, while others make small talk with their competition.
A man uses this time to make phone calls to a mechanic, who discourages him from making a regrettable bid on a “non-runner”.
He runs towards the towering fleet of trucks, where he joins the eager buyers as they take a final peek before the auction begins.
We are at Aucor Auctioneers’ popular commercial auction, at their head office in Midrand.
After spending four hours traveling to Johannesburg from Nelspruit (in South Africa’s Mpumalanga Province), for the auction, Charles Malibe gets into a heated bidding war that lasts no longer than a minute but is packed with plenty of fervent action.
It is noon and an overjoyed Malibe has just won a R465,000 ($32,401) bid on a second-hand truck.
“I attended my first auction three years ago. Sometimes you get it wrong and sometimes you get the right stuff at the right price. It is good to be exposed to new things. I went to Durban once, but I did not get anything there. It was not a waste. It is not only about getting things, it gives you exposure,” he says.
As Malibe heads back to Nelspruit, the auctioneer remains chanting until the last vehicle is sold, with the crowd getting smaller with each purchase.
Wasim Babamia, Aucor Auctioneers’ multimedia consultant, manages the national marketing for the 51-year-old auctioneering company.
Digitalization has disrupted traditional norms of advertising, and has made the industry more accessible for both buyers and sellers.
“Selling any asset boils down to supply and demand. The advantage of buying in an auction is cutting out the middleman, saving that money and getting something of real top value,” he says.
Marketing the call to action remains a vital component for the business.
“Social media has to be on point when we market a particular auction,” Babamia says.
Instagram, Twitter and LinkedIn are some of the biggest platforms, apart from the traditional pamphlets and website advertising strategies.
According to Babamia, online bidding has pulled in more numbers over the past four years.
He sees a rapid transformation in the auctions landscape in the foreseeable future.
According to a South African Institute of Auctioneers (SAIA) report, Gauteng is the highest province of interest with over 6,000 potential buyers (for all kinds of auctions including residential properties, retail vehicles, jewelry and collectables) on its website, while the Northern Cape is the lowest with just over 1,000 buyers.
The traditional means of auctioning have had to make way for digital platforms that have been steadily increasing over the last decade.
SAIA records close to 100,000 visitors to online auctions in 2010; the first half of 2019 is already at 400,000 visitors.
Last year’s record 600,000 visitors reflect that the online market could be just as lucrative as the live auctions.
As the state of the South African economy remains uncertain, Babamia suggests that auctioneering will always provide a cheaper option to consumers.
An industry that has been in existence for more than 2,000 years continues to grow despite its many iterations over the years.
Ancient Greek records on auctions dating as far back as 500BC show women were auctioned off to become wives.
Auctions were popular for family estates and the selling of war plunder in Rome.
As a result of the great depression in the 1900s, the United States opened auction schools to generate income as businesses and individuals needed to liquidate assets to withstand the economic crisis.
In recent times, market trends have changed dramatically to adapt to socioeconomic norms.
A shift to online auctioneering has been a great development and contributor to the fluid industry.
Orbis Research reports that the global online auction market is expected to grow during the period 2018-2022 with a 7.2% compound annual growth rate.
“Another major trend witnessed in the online auction is the immense impact of artificial intelligence (AI). AI’s main role in an online auction is to perform different tasks such as processing internal operations, customer-service inquiries, delivery and product packaging. In the last years, AI has instigated a gradual shift, from conventional auction to online auction,” the report states.
The increase in sales of art-based goods through online auctions is a key market driver.
Traditional live auctions, however, are still a preferred option for bargain-hunters, despite the global steer towards digitalization.
This is according to fine art specialist Luke Crossley who manages Stephan Welz & Co. in the affluent northern suburb of Johannesburg, Houghton Estate.
Moving to simpler models will improve the industry by providing a greater competitive edge, he says.
“There is a growing interest and understanding of auctions across a broad section of people where, maybe, a couple of decades ago it was seen as just for the very rich people doing very rich things.
“People are realizing that it is a great way of finding weird and beautiful objects, artwork and furniture at quite reasonable prices,” he says.
The increase of auction houses in South Africa offers a variety to buyers and sellers, with SAIA having 80,546 members registered by April 2019. As a result, the art and design market is at an advantage.
“The South African art market on auction is always evolving and broadening. The importance to history and art history is being realized and there is a growing interest and demand for these. It is encouraging a lot of the younger artists working with galleries to look at the history and heritage of artistic practice in this country,” Crossley says.
“With growing appreciation for South African and African art overseas, a couple of international houses based in England regularly do sales of more historical work. The audience overseas means a lot for the artists, the country and the future.”
Selling or buying art on auction engages the audience as well as the creator.
“The gallery, thus, becomes the primary market where young artists can build their careers; whereas auctions and private individuals with a passion for art can sell work they own, re-invest in other artists, or buy.
“It creates a second life for an artist once they have had their exhibition. With an auction house, you can reach a broader audience. Auctioneering is a great way of indirectly promoting the artist,” says the art specialist.
A mobile museum acts as a platform that simplifies the process and eases access to the market for artists and admirers.
A world of opportunity, at the click of a button, gives upcoming artists a chance to compete in the art market.
Art lovers can sit in the comfort of their homes, evaluate the work before-hand, request for condition reports and place a bid while monitoring the action on screen.
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“Auction houses, historically, would work with physical catalogues. We still do catalogues but with the possibility now to create an app for the auction house to allow interaction directly with the audience.
“It seems simple now with email, but previously, you would write a letter and take a photograph and get it delivered. Now, there is an ease of communication,” Crossley says.
On the other end, Jerry Horn from AuctionInc. argues that despite the digital migration in South Africa, live auctions are still the safest and simplest way for auctions to take place.
Online platforms also lack interpersonal interaction.
At the moment, live auctions are still more popular, he says.
“Online auctions are impersonal, you wait till the time is up and if you get it, you get it, if you don’t, then you don’t. There is no emotion attached to it. Live auctions still create the hype… humans are emotional creatures,” Horn says.
We meet Horn and fellow broker Disa Smuts at a three-bedroom house which is being auctioned for R1.5 million ($105,301) at an upmarket security estate in Pretoria called The Wilds Security Estate.
Buyers meander in and out of the house as they assess the property. They pry further as they look through windows, open cupboards and check light fixtures, along with all the other fittings of the house.
Bidding begins as the amount crescendos to the millions.
Finally, a buyer who is pleased with the finishing of the house, makes the highest bid at R1.5 million and this bid concludes the auction for the home, as the final hammer drops.
This is a success for the auctioneer and a gloomy moment for latecomers who only have the luxury to dawdle in the empty rooms they could have owned.
Hennie Swart arrived at the double-storeyed home just after the conclusion of the auction, and he was not going to let this bargain slip through his fingers.
A counter bid amounting to R1.8 million ($130,654) makes him next in line if the first deal does not take place for any reason.
Swart, who is a property developer, says purchasing on auction offers a discount of 10% to 20% less than market value.
Today’s offer is a cheaper buy than Swart’s most expensive purchase of R2.1 million ($147,428) for a three-bedroom home.
“I have got a property portfolio and I try to expand my portfolio by buying property on auction. I normally look at simplexes that are normally safer because the possibility of getting a tenant is higher,” he says.
Attending live auctions gives him a first-hand experience of the area, the property and the potential return on investment.
A common practice Horn encourages.
Online bidding may be convenient but competition on the floor is good for business, and it puts on a good show.
Bids increase by the second.
Four figures speedily turn into six figures.
The auctioneer chants vigorously while his focus is fixed on the audience.
Sweat drips from his nose, and all the attention is directed to a woman at the back of the room.
The room falls dead silent.
“And sold to the woman in the far right!”
The audience cheers on, as she graciously leaves the room.
It is this fervent excitement that people enjoy.
Time and competition are the most important factors to prioritize in this business.
The aim is to spend less while encouraging competitiveness.
“You don’t have ‘show days’ that take up time, and with a six-week [administrative] process before the auction date, people come and bid and the property is sold on the day.
“People bid against each other to get what they want. Most of the time you get more money than what you are asking for,” Horn says.
South Africa’s market, promising as it is, has room for development.
“If you go to countries like Australia and New Zealand, there are no ‘show days’, there are no real estate agents, everything is done by the auction basis,” Horn says.
This cuts out the middleman, and thus minimizing costs, making the purchase more lucrative for the buyer.
Whereas in South Africa, there are other factors to consider, such as real estate agent commissions, bonds and prime lending rates which make the process arduous and more expensive for the buyer.
Horn frequently travels to Angola, Tanzania, Zambia and Kenya for business.
“Property is a lot more expensive up there because it is dollar-related,” he says.
The economic climate of a particular region or area determines the value of property.
Property auctioning depends largely on adequate research and comprehension of the landscape.
Buyers often become sellers after acquiring an understanding of the industry.
Smuts, who sold her 18-year-old business on auction, decided to become an auctioneer herself.
The uncomplicated nature of transactions is what attracted her, she says.
However, clients usually call when their property has been on the market for too long and the asking price becomes too high for the market.
“The owner will give a sole mandate to give a right for the sale of the property and make sure that it goes to the market correctly. The auction is done on the day, and make sure it gets the highest price. The auctioneer’s job is to protect the property’s value,” she says.
Protecting the interests of all parties involved should be the auctioneer’s priority, Smuts adds.
Whether you’re buying from the comfort of your home while basking in the sun by your swimming pool, or you just lost out at a live bid, chances are, it can’t get any cheaper than at an auction.