Auction sales are on the rise in South Africa and have grown by a huge margin of 40% during the course of 2019. However, despite the trend, it would be wise to realise that buying a property on auction does not necessarily mean that you will always be getting a good bargain!

Auctions are regulated by section 45 of the Consumer Protection Act 68 of 2008 and it is important to know the rules of the auction game long before you decide to get involved.

Different types of auctions in South Africa

There are many different types of auctions and it’s vital that you familiarise yourself with the protocols before engaging.

Voluntary Auctions

  • This is where the seller places his/her property on auction in anticipation of achieving the highest purchase price for the property.
  • Often, the seller will set a reserve price which means the sale is subject to the seller’s acceptance.
  • This type of auction usually favours the seller and not the buyer.

Bank Auctions

  • This is where the bank voluntarily places the property on auction because the seller is significantly in arrears with their bond payment.
  • Bank auctions favour the buyer as the properties are usually sold at a reduced amount with the usual warranties, and on transfer the seller becomes liable for the rates and taxes.

Sheriff Auctions

  • Sheriff auctions are where property is sold in execution. The court issues a judgment for the property to be attached and sold in order to settle debts owed by the owner – this is carried out by the sheriff of the court and sold to the highest bidder.
  • The property is sold voetstoots, which means ‘as is’ and the buyer will subsequently have to settle all outstanding debts on the property.
  • In most cases the bank purchases these properties themselves.

Property in Possession (PIP)

  • When the bank purchases a property at a sale in execution this property is known as PIP. The bank usually does this at a high cost to themselves and when reselling the property, they ensure that the purchase price is high enough to compensate themselves for the monies they have spent.

What does the auction process entail?

It is best to prepare yourself thoroughly prior to the auction and be ready on the actual day for making your bid.

Preparation prior to the auction

  1. Try to view and inspect the property prior to the auction date.
  2. Gather as much additional information as you can about the property as well as the neighbourhood. The auctioneers should be able to supply you with copies of the title deed, site diagram, property plans, lease agreement and zoning certificate, where relevant.
  3. Read the conditions of sale in advance.
  4. Arrange your finances in advance. If you are the winning bidder, you cannot after the fact try to arrange finance.

On the day of the auction

  1. Register as a bidder and get a number or bidder’s “paddle”.
  2. You will need your ID document, proof of your residential address (such as a municipal account), and the registration fee, usually payable by EFT or bank guaranteed cheque and is fully refundable if you decide not to bid after all, or if your bid is unsuccessful.
  3. If you are bidding on behalf of someone else or a close corporation (CC) or a Trust, you will also be required to complete the registration process. You may also be asked to sign an undertaking accepting responsibility if the person or entity drops out after a successful bid. 
  4. If your bid is immediately successful and not subject to approval, you will need to sign off on the Conditions of Sale confirming your purchase of the property.
  5. You will be required to pay the auctioneer’s commission (usually 10% of the purchase price plus VAT) and a deposit of at least 5% of the purchase price, less your initial registration fee. The balance of the purchase price will only be payable on transfer of the property.
  6. Remember to double check when the risk in the property passes to you before you leave the auction site. This will either be on fall of the hammer or on registration of transfer. This is important to allow you to make the necessary arrangements for insurance.

After the auction

Should you default on the sale after the auction, the seller will have the right to take legal action against you as you have signed a legally binding agreement.

If you can navigate the auction market properly, you may find a bargain

Familiarise yourself with these key essentials and it is possible to hunt down a bargain property that is being sold on auction. If you have any queries about the auction process or need assistance assessing the sale agreement and auction terms and conditions, please contact our knowledgeable Conveyancing and Property Law attorneys.

For Conveyancing and Property Law expertise

Nicholas Hayes    

Marita Swanepoel

David Kagan         

Farzanah Mugjenkar


The articles on these web pages are provided for general information purposes only. Whilst care has been taken to ensure accuracy, the content provided is not intended to stand alone as legal advice. Always consult a suitably qualified attorney on any specific legal problem or matter.