A perception is doing the rounds that auctioneers are to blame for the large number of houses, vehicles and other items being repossessed by banks. The logic, if one can call it that, is that auctioneers are making a packet out of the commissions they earn, and therefore are urging the banks to repossess more.
Another rumour, which can almost be described as a corollary, has some convinced that because so many people are going belly-up and because their assets have to be disposed of for banks to recoup their money, auctioneering has become the fastest-growing industry.
Which may, repeat may, be right, but difficult to prove without statistics.
Those who blame auctioneers for the large number of houses and cars being repossessed maintain the banks did no wrong by tempting borrowers to take out loans, even though the banks knew rates would rise and that the borrowers had to stretch their resources to maintain their instalments even at the low rates that existed then.
Anyone with a single brain cell knew those rates could not last, but the auctioneers are to blame.
It is of course a tragedy if anyone loses his or her home — but it is difficult to work out how auctioneers can be described as the villains of the piece.
Had it not been for them, and had lending institutions continued to repossess assets when defaulting lenders passed certain limits, the institutions would have been sitting with an awful lot of real estate and countless warehouses filled with cars.
Which raises an intriguing question: is repossessing and then auctioning assets the right way?
If, for example, a bank forecloses on a bond when a borrower owes it R1.2- million, and all it gets when it puts the house on auction is R800000, has it not created a lose-lose situation?
The borrower still owes the bank R400000 apart from his other debts, which are mounting if he has been retrenched and cannot find another job.
And because he does not have the finance to buy another home he has to rent a place, which is a further burden on his resources.
Should the borrower declare himself insolvent the bank will not score either. It will have to write off the R400000 he still owes.
The downside of the large numbers of residences coming under the hammer is that they have dramatically increased the already large stock of homes on real estate agency books, creating a buyer’s market and reducing residential property prices.
John Loos, FNB property strategist, said: “The April FNB House Price Index reached double-digit year-on-year average house price deflation for the first time, to the tune of minus 10.2%. This puts the average house price level back to the level at the end of 2006.”
The problems the new car market is facing must certainly be due in some measure to the large number of cars being repossessed.
Surely, the high-powered brains trying to improve the way we conduct global finances can devote some time to devising a better method?
The supply of residential property being auctioned is not drying up. The Alliance Group (AG) has started what it calls “jumbo” auctions.
On May 16 and 23 it apparently auctioned close on 200 houses in Pretoria and Johannesburg. That’s a lot of houses, and AG is not the only major auctioneer seeking new owners for repossessed homes. But blaming auctioneers for the problem is akin to shooting the messenger.
Banks are also foreclosing on commercial properties. In Gauteng on June 2, starting at 10.30am, Park Village Auctions will put the 725m² Unit 1 at 37 Angus Crescent, Longmeadow Business Estate, Edenvale, under the hammer.
The facility consists of a 437m² warehouse/production house, a mezzanine level with storage facilities, a double-storey office wing, a guardhouse and shadenet carports.
At noon at the Southern Sun Grayston, corner Rivonia Road and Grayston Drive in Sandton, BidLine will auction 14 properties ranging from what it describes as a mansion at 79 Cedar Road, Chartwell, Fourways, through two warehouse complexes on 3.7ha in Maggs Street, Waltloo, Pretoria, to a 28-room hotel in Rietfontein Road, Primrose.
At midday on Wednesday in Tsumeb, Namibia, Aucor Namibia will start a two- day sale of Weatherly Mining Namibia’s assets, including underground and surface equipment, a recreation club, three residential properties, a sawmill and a mineralogical laboratory.