There are innovative ways of buying or selling your house - and you can save a bundle on fees and commissions! Traditionally, estate agents do the work of marketing and showing the property and managing the relationship between buyer and seller - for a fee of between 5% and 7.5%. We looked at two popular alternative methods - online property listing sites, and “willing seller” auctions - and the pros and cons for both buyers and sellers.
Online property listings
If you do a search for “sell my property online” you’ll see that there are quite a number of websites offering their services. We chatted to Ashley James, the head of operations at PropertyFox to find out how the process works.
How does a homeowner sell a property through your site?
Sellers make contact with us online. They sign a digital mandate, after which we send a professional photographer to visit their home to take quality photographs and assess the floor plan. We give the information to a professional writer to create the listing, which the seller can edit, and it then usually goes live within 48 hours. The seller is supported throughout the process by different dedicated professionals at each stage - creating the listing, marketing the property, arranging show days, obtaining feedback from interested parties, concluding the sale, and arranging transfer of the property.
How much does it cost the seller?
The total commission is 1.5%, but there is an upfront non-refundable fee of R2 500 that covers the listing costs. This fee is deducted from the commission when the property is sold.
How is the property marketed?
We list the properties on our own website, but we also market them on all leading local property portals, including Property24 and Gumtree, as well as some international portals. Buyers get in touch with us if they are interested.
What about show days?The seller lets us know when they are available and we set up a time for potential buyers to visit. We verify their ID numbers before allowing them to view the property. If the seller doesn’t want to host show days themselves, we can take over that side of things for an additional R2 500.
How does the process ensure that the seller gets a fair price?
When the seller first makes contact with us, we send them listings for the 20 most recent property sales in their area and the current competing sales on the market. This helps them to settle on a fair, market-related price for the property. Because of the online nature of the listing, we can also provide feedback along the way, based on the clicks and calls their listing receives and on input from potential buyers who have visited the home.
How do buyers purchase a property through your site?
We follow up with the buyer after they’ve seen the property and if they want to make an offer, we facilitate that, then submit to the buyer. If it’s accepted, we send the signed offer through to the conveyancing attorneys. We also have relationships with all the banks and bond originators to help with arranging finance. We offer post-sale support from offer to key handover.
How long does it usually take to get a sale?
In a liquid market and if the price is right, we can wrap up a sale in a couple of weeks.
The benefits of online listings
- For the seller: A significant reduction in commission fees, as well as being managed by focused professionals at each stage of the sales process.
- For the buyer: While the approach to buying a home through a property listing site is very similar to going through an agent, the buyer will also benefit from the support they will get at every stage of the process.
Then we chatted to Ernest Botha, a director at Global Property Auctioneers. He explained the “willing seller” auction, which is a voluntary auction rather than one that is the result of repossession by a bank. This type of auctions is gaining popularity around the world as a fast and efficient way to sell a house at a market-related price, despite a relatively high commission.
How do you sell a property on auction?
The seller gets in touch with the auction house, and we sign a mandate and create a listing for the property. At a given date, the property is auctioned, either at an actual auction, where buyers bid for the property, or in a silent tender, where they each submit a bid electronically and the highest bidder gets the property.
How much does it cost the seller?
The buyer pays the commission, which is around 10% (some auctioneers may be negotiable on this fee if it will help to secure a sale). Auctions are carried out at no direct cost to the seller, but the commission paid by the buyer does, of course, affect the final price that they can charge for their property.
How is the property marketed?
The property is marketed to all major South African property portals, as well as to some international ones. We also have a database of buyers, including cash buyers and developers, who are in the market for buying on auction.
What about show days?
We usually arrange one or two open houses at which prospective buyers can come and have a look before the auction. They have to RSVP and we don’t put up street signage to attract passers-by.
How does the process ensure the seller gets a fair price?
The seller can set a reserve price - the property won’t be sold for less than that. The bidding process allows each bidder to make his best offer, thus allowing for a market-related rate to be achieved.
How do buyers purchase a property on auction?
If they are interested in a property, they contact us and we send them the bidder’s catalogue with all the information. They then come to the open house, and if they are interested, they can either submit a bid through a silent tender or auction, depending on what the seller wants. Auction buyers have to either have the cash to make the purchase or have pre-approval from their bank – which we can help them arrange. At the fall of the auctioneer’s hammer or the acceptance of a silent bid, the auctioneer’s commission (10%) and the deposit (5%) immediately become owing, so the buyer has to have these funds available. Some auctioneers charge a refundable registration fee of around R10 000, but this practice is decreasing. We then send the offer to purchase to our conveyancing attorneys.
How long does it take?
The auction way is much quicker than going through an agent, because we give the property much higher exposure through our marketing channels – our target is to sell within three to four weeks, compared to months through an agency.
- For the seller: A fast turnaround on the sale, a prequalified buyer, and a price that is representative of market value.
- For the buyer: There are fewer benefits to buying on auction for the buyer, who will have to do a lot of leg work to be prepared to make the purchase. However, once that’s done, they will benefit from the fast turnaround time of homes in the auction system.
Other property auction companies
Auction houses mostly operate on the same principles that we’ve already mentioned - so it’s best to shop around for one that operates in your area and ask for referrals from friends, or get a feel for an auctioneer that you like. Here are some leading South African auction houses:
The bottom line If you’re willing to buck the trend of using traditional agents, and to do some of the leg work yourself, selling through an online site has significant benefits. And if you sell on auction, you don’t pay the commission costs at all – although the cost passed on to the buyer does affect the final price – and you gain the advantage of a faster sale turnaround and a prequalified buyer. Both of these selling and buying processes are gaining global attention, so they are worth considering if you are in the market to sell or buy a home.