Auction sales have come a long way since Joseph’s jealous siblings cast him into a pit, eager to sell their father’s favourite to passing Medianite merchants zealously price-pushing one another in a bid for the bragging brother and his colourful coat.
These days bidders still up the ante, and yet, almost everything else has changed for the world’s most exciting sales technique – where the value of an asset is determined there and then, and a winning bid is announced by the fall of a hammer.
Even the iron grip that traders used to wield over public sales has loosened enough to make way for the raising of more hands, especially those of private buyers.
“A few years ago the market used to be dominated by dealers,” says Johan Olivier of Auction Finance, a brokerage dedicated to securing finance for bidders through major financiers such as WesBank, the Motor Finance Corporation (Nedbank), Absa and Standard Bank.
“Up to 95% of bidders at car auctions were dealers. That scenario is now more evenly split – 50-50.”
Olivier, a broker who has an asset management background with FNB and Volkskas (amalgamated into Absa), says that through his prior experience with the “remarketing of forfeited assets ... a need was identified to bolster the bidding power of would-be private buyers”.
Prior to providing bidders with on-the-spot financial aid, private buyers were left to their own devices, with little recourse against getting routed by dealers.
But cash-in-hand options and access-bond borrowing – “at a high interest rate” – as well as other limited resources open to private buyers received a boost when Auction Finance opened its doors about 13 years ago.
Such measures of professionalising auctions – paving the way for more buyers through creditable bank vetting while assisting the industry to self-regulate – have made all the difference.
“It’s a smooth, seamless process,” says Olivier.
“If bidders have their financials in order and they provide the necessary documentation, we can secure and improve their financial standing almost immediately.”
Olivier says it helps if bidders use the time set aside for viewing assets coming up for auction.
5 things to do before buying a car on auction
There are five things prospective bidders should do in preparation for an auction, says Johan Olivier from Auction Finance:
- Most importantly, get in contact with a reputable financier or brokerage firm specialising in auction finance. In so doing, bidders enable themselves to secure the best deal possible by having an accurate assessment of money matters
- Attend the viewing periods of auctions. Getting a thorough grasp of the assets on offer through look-and-feel experiences are crucial, because auction sales are voetstoots (what you see is what you get), so being forewarned, as always, means being forearmed.
- Get all your documents in order. As per Fica legislation, legitimate auctions are based on authenticated financial details. An auctioneer that doesn’t abide by basic rules and regulations as to current vetting procedures should not be trusted.
- Seek insurance after an auction purchase. This is an added value companies like Auction Finance provide to give bidders peace of mind before removing their newly acquired assets that have been successfully bought at auction.
- Be patient. The worst thing a buyer can do is to get caught up in the action and be hard-pressed to buy just for the sake of it. The whole point of an auction purchase is to get more bang for your buck, in which case there are more than enough auctions to wait until all the chips fall into place.
“It gives them the opportunity to thoroughly inspect the assets on offer, thereby nullifying comebacks, but it also helps us to use the time at hand to go through the necessary checks and balances of pre-approval.”
At face value it seems that Auction Finance is predominantly active at car auctions, but Olivier points out that they also do “commercials” – consisting of trucks, tractors, trailers, machinery and the like, as well as agricultural assets, aviation lots and construction machinery.
Remaining flexible in an industry that has always required resourcefulness of its participants, where the clock never stops ticking and forfeited assets are depreciating by the minute, means that Auction Finance often has to vet bidders moments before a sale starts.
“But it doesn’t take long,” says Olivier.
“We make use of a system called Signio that links up with all the major banks. The moment we have fed your particulars into the system, it takes up to 15 minutes before we have an answer.”
Ideally, applicants are emboldened by the news that they can actually buy more than they thought they could.
Unfortunately, there are times when bidders are turned away.
John Mokoena, a buyer who attended a car auction at Imperial Auto Auctions in Meadowdale, where Olivier and his staff were present earlier this week, has no qualms about his blacklisted status.
“I don’t have work and this is a way to make some money.”
Mokoena said that if he had access to more capital, he could probably make more money by being able to buy more stock he could resell privately.
It brings to mind the importance of additional service rendering to bidders like Mokoena.
Zanele Ngcongo, a finance and insurance consultant for Auction Finance, said: “We look at interest rate calculation, for example, making sure that buyers are aware of the potential increase in repayments they may have to contend with.”
According to Olivier, value-added services such as providing buyers with the necessary insight to prevent secondary defaulting on previously forfeited goods – a major concern of auctioneers – eventually came naturally to Auction Finance.
“People find it hard to believe that they can get one- and two-year unlimited warranties on certain assets.
“We also offer other value-added products (VAPs), such as insurance through at least five reputable service provides, scratch-and-dent repair, tyre replacement and deposit protection.
These VAPs, says Olivier, mean “we can do everything hire purchase outlets can do for you if you buy a brand-new car.”
Little wonder new car sales are having such a tough time of it.
Auctions have clearly caught up.