It's Saturday, it's the open thread and the Boks are about to crush the Ozzies.
15 comments:
PropertyNovice
said...
Hi all
Firstly thanks for a great blog.
Does anyone have any experiences purchasing properties that are auctioned off by the sheriff of the courts ?
What are the things that one needs to look out for ? Are there any resources (articles/books/websites) available on this subject that someone can recommend ?
Basically I have been considering this avenue to purchase a property but am pretty nervous as this would be a first for me.
Any experiences or advice shared would be appreciated.
For what it's worth, I think I have a rough idea now of how this is all going to pan out -
Deflation for the next year then flatish for 2 years (0%,1%). Interestingly my office lease has recently been extended and the landlord wants no increase for the next 12 months and only 2 % for the year after that.
Gold will go down. Dollar strong. Equities are about to fall out of the sky and will drop another 60% till mid next year.
Housing bottom about 3 years away.
The US depression will be worse than 1930's. Global turmoil. Maybe wars.
Inflation will start to increase and over 2 or 3 years will peak at 13% in SA around 2016. Interest rates will go up to stop them. Houses will move up in price at about the price of inflation.
This will be when it is payback time for the US. Maybe their inflation will spiral out of control. Too early to say. But this is when gold makes its long awaited move up. Maybe 2500.
This will put the Dow Gold ratio at about 7 which is where it should be at the bottom of the channel on the chart.
100 ozs Gold will buy an average UK house £150,000 / £1500 ($2500) and an average US house. This is the bottom peak of the chart.
Then the baby boomers start downsizing and housing is in the doldrums for a couple of decades because of this. It will keep pace with inflation if you are lucky.
That's how I see it unravelling. The scenario seems to fit the various trends and cycles on a whole bunch of charts.
If I had a dollar for every Anonymous who slagged off CJ on this site I'd be rich. Oh, wait, I already am rich, because like CJ I spotted the bubble waaaaay early and sold my portfolio. Not going to touch this leper of a market inside the next three years, by which time all these pathetic little Anonymouses with their pathetic little "bargains" will be so deep underwater they'll be giving their properties away.
CJ, I don't believe it's going to get as bad as you suggest, but you're definitely on the right track. As for "global turmoil, maybe wars", well, that could describe any time in the last 10,000 years so nothing new there. But I do hear you. Can't wait to watch all the bears choke on their vanity.
Now that you have sold your two unit property portfolio, what are you investing in? Shares maybe? Or is your money in a money market account recieving 7%?
If you had half a brain then you would be investing in property. And listening to somebody like CJ aint going to make you richer.
CJ doesnt own property so its like a man with no legs giving advice to a athlete about to run a race.
Property at the moment is overpriced but it shouldnt stop you from buying it. Look around and you'll see the opportunities.
There are tons of people in distress, up to their eyeballs in debt and trying desperately to offload their property. Now is the time to milk these people for all they are worth. I have!
And my portfolio has grown exponentially since the credit crunch and hard times started.
So dont be a fool and listen to people like CJ. Now is the time to buy property at discounted prices.
Is your landlord getting 3% based on property boom valuation or is it based on what he can get for the house if he sells it now.
Because if he gets 3% based on property boom times, then its not bad and the house really is worth a lot, even if its a bad return. And if he gets 3% on what its worth in the current market, then the house you live in has not devalued according to the general trend (40 - 60% down)
Hey there everyone, its 'Mr 12% nett return ' speaking.....
Re sheriffs auctions, there are pro's and cons of buying at these sales.
The pro's is that prices are normally way lower than what you would pay through a private auction or through a agent.
Furthermore, the sheriffs commission is capped at R9000 odd so on a R500K house, thats pretty minimal.
The cons is that the buyer must pay all outstanding council accounts and body corporate levies. This normally runs into the thousands, sometimes into the tens of thousands. However the sheriffs confirms the amount before the auction (give or take a thousand or two) and you can bid accordingly.
There is also interest charged from the date of the auction up until the date of transfer into your name by the bank involved. The interest rate is usually the same rate the person was paying to the bank on his loan when the property was repo'd.
The transfer fees and duty are the same as a normal sale.
The major drawback of a sheriffs auction is that you are not guaranteed vacant occupation. Sometimes the owner is still in the house when it gets auctioned and it is up to you to get them to leave. In my experience, i have had two cases when the owner is still occupying the property but we came to a agreement and they left quickly (maybe my shady looks helped).
However, there has been cases that i have heard of where owners refuse to move out leading to a protracted legal battle that can make your life miserable. The majority of repo'sproperty is either vacant or has a tenants so the odds of a owner occupying are small.
If there is a tenant occupying the property, their lease usually falls away depending if the property was uctioned with or without a lease. There sheriffs usually auctions the property subject to alease and if they fail to get the banks required minimum price, then they auction it without leases.
One must also have cash on hand to finance the deal. The sheriffs wants his commission at the fall of the hammer plus a 10% deposit. The transferring attorneys will call for the balance (either in cash or a guarantee) withing 14 days. Remember that you are being charged interest at prime from day one so it is best you push for a quick transfer. If you wait for bank finance and you dont get it then your deposit and sheriffs commission is forfeited and the bank has the right to come after you for the balance.
Another factor is that repo's property is usually in a bad state leadign to renovation costs.
Buying at a sheriffs auction is not for the faint hearted but if you do your homework and are prepared to maybe have to get nasty with previos owners, then good deals may be had.
However, of late, the interest at sheriffs auctions has been growing exponentially with up to 10 bidders on one property where less than a year ago, I was the only bidder against the bank.
It is a strange phenomenon in that prices at these sheriffs auctions are going up whereas prices being achieved traditionally through estate agents continue to fall.
The properties I have purchased at the sheriffs auction have returned, on average, 12% nett return. For example, a 3 bedroom flat in Rondebosch East are was bought for R325K and the gross rental is R4000. Less levies (R600 pm) and council rate (R130 pm), its just short of 12% nett. The proeprty is worth about R500K in this market so i score on the return and the capital growth.
Another example is of a property that I bought in the northern suburbs for R570K. I did a R170 K renovation and extension dividing the house into two. The nett rental being achieved is R9000 per month giving a nett return of 14%. The property is worth about R1.2 million.
So there is bargains to be had but make sure that you have the cash on hand and that you have done your homework re the price.
slaThank you Mr 12% nett return. Your post is very informative.
Buying property on an auction seems to be more involved than what some would like to believe. It is very clear that you know your story. Is it advisable for Joe soap to attempt to buy auction property considering the pitfalls?
I would advise a ordinary person to rather attend private auctions being conducted by companies such as Alliance Group/Auction Alliance, Aucor or Michael James.
With these auctions, it is mostly distressed, insolvent or deceased estates that are selling.
The process is much smoother in that you bid at the auction, your offer is taken back to the seller and if confirmed, then the sale follows traditional lines in that all the council rates and taxes are paid up, there is vacant occupation and everything runs smoother.
The downside of these auctions is that the over and above the price, the auctioneer takes 11.4% commission which is quite a whack extra.
The prices are generally higher also at these auctions and it can take a long time to get a bargain.
At these auctions you are required to pay the commission at the fall of the hammer and if you require bank finance and do not obtain it, the commission you paid is forfeited to the auctioneer.
Buying at a auction requires that you cash on hand to finance the deal. You cannot bid and then go and obtain finance because there is a good chance you may lose your deposit and the commission.
But if you do have the cash, do yourself a favour and attend some of these auctions and comapre prices.
15 comments:
Hi all
Firstly thanks for a great blog.
Does anyone have any experiences purchasing properties that are auctioned off by the sheriff of the courts ?
What are the things that one needs to look out for ?
Are there any resources (articles/books/websites) available on this subject that someone can recommend ?
Basically I have been considering this avenue to purchase a property but am pretty nervous as this would be a first for me.
Any experiences or advice shared would be appreciated.
Apologies if this is off topic.
Thanks
For what it's worth, I think I have a rough idea now of how this is all going to pan out -
Deflation for the next year then flatish for 2 years (0%,1%). Interestingly my office lease has recently been extended and the landlord wants no increase for the next 12 months and only 2 % for the year after that.
Gold will go down. Dollar strong. Equities are about to fall out of the sky and will drop another 60% till mid next year.
Housing bottom about 3 years away.
The US depression will be worse than 1930's. Global turmoil. Maybe wars.
Inflation will start to increase and over 2 or 3 years will peak at 13% in SA around 2016. Interest rates will go up to stop them. Houses will move up in price at about the price of inflation.
This will be when it is payback time for the US. Maybe their inflation will spiral out of control. Too early to say. But this is when gold makes its long awaited move up. Maybe 2500.
This will put the Dow Gold ratio at about 7 which is where it should be at the bottom of the channel on the chart.
100 ozs Gold will buy an average UK house £150,000 / £1500 ($2500) and an average US house. This is the bottom peak of the chart.
Then the baby boomers start downsizing and housing is in the doldrums for a couple of decades because of this. It will keep pace with inflation if you are lucky.
That's how I see it unravelling. The scenario seems to fit the various trends and cycles on a whole bunch of charts.
Couple of good articles from Kunstler...
http://kunstler.com/blog/2009/08/financial-crisis-called-off.html
http://kunstler.com/blog/2009/08/hunky-dory.html
At the top of the rollercoaster...
Insider Trading and Investor Sentiment Signaling U.S. Stock Market Top
http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/08-28-2009/0005084471&EDATE=
Oh shutup CJ...you sound like a stuck record...blah blah blah!
I have been to sheriffs auction and have picked up bargains in excess of 12% nett return.
but dont listen to me, rather listen to the rent boy CJ who loves to profess doom and gloom in the property market.
One day CJ...just one day....you might be able to afford your dream home but in the meantime, shut your pie hole and get a life!!
If I had a dollar for every Anonymous who slagged off CJ on this site I'd be rich. Oh, wait, I already am rich, because like CJ I spotted the bubble waaaaay early and sold my portfolio. Not going to touch this leper of a market inside the next three years, by which time all these pathetic little Anonymouses with their pathetic little "bargains" will be so deep underwater they'll be giving their properties away.
CJ, I don't believe it's going to get as bad as you suggest, but you're definitely on the right track. As for "global turmoil, maybe wars", well, that could describe any time in the last 10,000 years so nothing new there. But I do hear you. Can't wait to watch all the bears choke on their vanity.
Yo chucky
Now that you have sold your two unit property portfolio, what are you investing in? Shares maybe? Or is your money in a money market account recieving 7%?
If you had half a brain then you would be investing in property. And listening to somebody like CJ aint going to make you richer.
CJ doesnt own property so its like a man with no legs giving advice to a athlete about to run a race.
Property at the moment is overpriced but it shouldnt stop you from buying it. Look around and you'll see the opportunities.
There are tons of people in distress, up to their eyeballs in debt and trying desperately to offload their property. Now is the time to milk these people for all they are worth. I have!
And my portfolio has grown exponentially since the credit crunch and hard times started.
So dont be a fool and listen to people like CJ. Now is the time to buy property at discounted prices.
Hi
Can someone please answer PropertyNovice?
I am also interested in this but know diddly squat about auctions.
Why is this forum always about bickering?
Someone help! lol
CJ States his opinion, use it don't use it.
If what CJ says does not fit your opinion or view, do not read his posts.
There is absolutely no reason to attack him personally.
Mr "I have been to sheriffs auction and have picked up bargains in excess of 12% nett return".
Can you please help PropertyNovice.
Do tell us more Anonymous.
My rental gives a return to the landlord of about 3%. Do tell us about your 12% deal.
Price of property, number of bedrooms and rental would be a good start.
CJ,
Is your landlord getting 3% based on property boom valuation or is it based on what he can get for the house if he sells it now.
Because if he gets 3% based on property boom times, then its not bad and the house really is worth a lot, even if its a bad return. And if he gets 3% on what its worth in the current market, then the house you live in has not devalued according to the general trend (40 - 60% down)
Hey there everyone, its 'Mr 12% nett return ' speaking.....
Re sheriffs auctions, there are pro's and cons of buying at these sales.
The pro's is that prices are normally way lower than what you would pay through a private auction or through a agent.
Furthermore, the sheriffs commission is capped at R9000 odd so on a R500K house, thats pretty minimal.
The cons is that the buyer must pay all outstanding council accounts and body corporate levies. This normally runs into the thousands, sometimes into the tens of thousands. However the sheriffs confirms the amount before the auction (give or take a thousand or two) and you can bid accordingly.
There is also interest charged from the date of the auction up until the date of transfer into your name by the bank involved. The interest rate is usually the same rate the person was paying to the bank on his loan when the property was repo'd.
The transfer fees and duty are the same as a normal sale.
The major drawback of a sheriffs auction is that you are not guaranteed vacant occupation. Sometimes the owner is still in the house when it gets auctioned and it is up to you to get them to leave. In my experience, i have had two cases when the owner is still occupying the property but we came to a agreement and they left quickly (maybe my shady looks helped).
However, there has been cases that i have heard of where owners refuse to move out leading to a protracted legal battle that can make your life miserable. The majority of repo'sproperty is either vacant or has a tenants so the odds of a owner occupying are small.
If there is a tenant occupying the property, their lease usually falls away depending if the property was uctioned with or without a lease. There sheriffs usually auctions the property subject to alease and if they fail to get the banks required minimum price, then they auction it without leases.
One must also have cash on hand to finance the deal. The sheriffs wants his commission at the fall of the hammer plus a 10% deposit. The transferring attorneys will call for the balance (either in cash or a guarantee) withing 14 days. Remember that you are being charged interest at prime from day one so it is best you push for a quick transfer. If you wait for bank finance and you dont get it then your deposit and sheriffs commission is forfeited and the bank has the right to come after you for the balance.
Another factor is that repo's property is usually in a bad state leadign to renovation costs.
Buying at a sheriffs auction is not for the faint hearted but if you do your homework and are prepared to maybe have to get nasty with previos owners, then good deals may be had.
However, of late, the interest at sheriffs auctions has been growing exponentially with up to 10 bidders on one property where less than a year ago, I was the only bidder against the bank.
It is a strange phenomenon in that prices at these sheriffs auctions are going up whereas prices being achieved traditionally through estate agents continue to fall.
The properties I have purchased at the sheriffs auction have returned, on average, 12% nett return. For example, a 3 bedroom flat in Rondebosch East are was bought for R325K and the gross rental is R4000. Less levies (R600 pm) and council rate (R130 pm), its just short of 12% nett. The proeprty is worth about R500K in this market so i score on the return and the capital growth.
Another example is of a property that I bought in the northern suburbs for R570K. I did a R170 K renovation and extension dividing the house into two. The nett rental being achieved is R9000 per month giving a nett return of 14%.
The property is worth about R1.2 million.
So there is bargains to be had but make sure that you have the cash on hand and that you have done your homework re the price.
slaThank you Mr 12% nett return. Your post is very informative.
Buying property on an auction seems to be more involved than what some would like to believe. It is very clear that you know your story. Is it advisable for Joe soap to attempt to buy auction property considering the pitfalls?
I would advise a ordinary person to rather attend private auctions being conducted by companies such as Alliance Group/Auction Alliance, Aucor or Michael James.
With these auctions, it is mostly distressed, insolvent or deceased estates that are selling.
The process is much smoother in that you bid at the auction, your offer is taken back to the seller and if confirmed, then the sale follows traditional lines in that all the council rates and taxes are paid up, there is vacant occupation and everything runs smoother.
The downside of these auctions is that the over and above the price, the auctioneer takes 11.4% commission which is quite a whack extra.
The prices are generally higher also at these auctions and it can take a long time to get a bargain.
At these auctions you are required to pay the commission at the fall of the hammer and if you require bank finance and do not obtain it, the commission you paid is forfeited to the auctioneer.
Buying at a auction requires that you cash on hand to finance the deal. You cannot bid and then go and obtain finance because there is a good chance you may lose your deposit and the commission.
But if you do have the cash, do yourself a favour and attend some of these auctions and comapre prices.
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