 As a buyer or as a seller, when you are about to use this kind of method, which is auctioning in this case, what are those things that one should use or take into consideration when they are about to sell or buy a house using auctions? All right. I think one of the key things is before you go to auction, you have to familiarize yourself with the property. I mean, it can be from pictures, visiting the property before the auction starts so that you understand what you're putting yourself into and what it is that you're buying. Good evening and welcome to the Private Property Podcast, right here on the Private Property Facebook page. It's 7pm and it's a weekday, so where else would you rather be? Then right here with us where we talk everything in anything property. If you are seeing my face for the first time, my name is Dummi and I am your host. Welcome to a place where we are going to educate you on how to take those bold property steps so that you can grow your property portfolio where you buy, you sell, you invest. Where you do all of these things in this industry, we want to make sure that you are armed with the right information for you to be able to do that. So if you are joining us on Facebook, hoist that green heart and tell us that you are here. Mark the register. If you're joining us on the Twitter Spaces, thank you so much for always coming through and please share the space, retweet and share the space to make sure that people join in as much as possible. If you think someone is going to benefit from hearing the conversation we're talking about tonight, then make sure that you send them that link. Tonight, we are talking a very special topic. We've spoken a bit about auctions before and a little bit on how they have gone online and they have accustomed because of COVID-19. And tonight we're speaking the spike in the property space, especially in South Africa. And I'm joined by Luanda Furulimaje who is a transactional banker at Galatia Real Estates. Luanda, good evening and thank you so much for joining us. Very good evening to you and welcome and I'm welcoming all your listeners. Thank you so, so much. So tonight we're talking a little bit about the spike that you guys are seeing in the spike or lack thereof in the property industry when it comes to auctions and in the auction spaces. Can you really talk to us through the trends that you guys have been seeing over the past two, three years? I know with COVID it's really changed the way you guys do business, but we spoke a little bit about how the online spaces are helping you guys to continue the auctions. So please talk to us about how the space looks currently, how doing business looks for you guys and some of the trends you guys have picked up. Thank you. Yeah, we are actually entering a very interesting space in property, both commercial, both residential, cars and, you know, because people have been hit by a wave that nobody I mean, I thought a current like this would ever hit the economic, you know, the economic market. So the trends we're seeing is people selling, people selling because they need to invest their money properly, people are moving from their large houses into small properties just so that they can be on compact spaces to avoid certain types of, you know, over expenditures. And in the space of commercial properties obviously because the 2020 came to us all as a surprise and many offices are left without any employees inside. But these days we realize that it's important for other companies to invite. I mean, like today I know that, for instance, Salgar decided to open their offices back again and they're back in business and there was a welcome speech from their CEO today wanting the whole staff to start the interaction with the markets again, which I feel like it's very interesting because South Africans are not indoor type of people. We are more outdoors, we like to touch our clients, we want to go out and see what's going on, meet your client to find out if they're struggling with anything. So if you are only virtual and there's no touch, you know, touching your client in a manner that we were usually prepared to, like business becomes a little bit difficult and we don't come to decisions much quicker than before. So, yeah, online has become very interesting. I mean, it's a space that many of us never thought it would take off in South Africa. But yes, it's taking off so good. I mean, we see a lot of marketers, they go in digital. I mean, we have friends that have been invited to come work overseas so that they can and like better their education in terms of digital space and how best they can wrap their clients into thinking digital going forward. So, yeah, there's a lot happening in the space. And I think, yes, we just have to be open minded and open ourselves up to the new changes that we find ourselves in. Yeah, no, definitely. And, you know, I want us to talk a little bit more about the auctions themselves because they are just one mode of any kind of investor or a property buyer or prospective property owner would like to use in terms of acquiring a property. Can you talk us a bit through some of the advantages and the disadvantages of getting a property this way? Because if previously it wasn't or if COVID really shook things a bit for the property industry and getting houses this way, people might not think that it's really necessary anymore or this is a way that is still effective because of the different restrictions that COVID brought. And with the online spaces that have now come in the technological advancements that you mentioned, just talk us through some of these advantages that have come up, you know, because of the technological advancements one. And number two, just because of the mode of auctioning and some of the things that a buyer or seller is going to get as an advantage from using this method. OK, so auction is becoming like an increasingly mainstream that the both buyers and sellers are moving into. There's, you know, it's easy access to the market. You get a larger pool of, you know, potential buyers. And these are buyers that are that are actually engaged to buy the properties. Unlike when you go the private route and you try to find your own buyers. And now you have to find somebody, try to get them interested with auction, especially online auction. We speak to people who are potentially looking for your property that you want to sell. And we try to match those with whatever the property that could bring into auction. I mean, when we talk about competitive pricing, I mean, competitive pricing, I mean, you have a number of bidders. I mean, you can have five to ten bidders. So you can just imagine whatever the reserve price you thought you had in mind and maybe might not be able to reach the required price. You you get surprised at how best some of those competitive bidding can actually enhance the pricing of your of your property. You know, definitely. And has any of the technological advancements changed the way the business is done fundamentally? Like in one of our previous episodes, we spoke about how that the turnaround time is quicker. What are some of the other advantages that you guys have seen in terms of closing that sale? So most of the bidders, they come pre-qualified from their banks. Some of them will tell you, I have cash. I don't even need to get pre-qualified by any bank. So that on its own, I mean, before we even go to auction, the the seller has already got his conditions of sale. The buyer has the conditions of sale. And I mean, with that conditions of sale, you are able to familiarize yourself with what to expect and what might come out of the auction. And yeah, I think before we even get people registered, we already know how much they know of the property that they purchasing and what the seller is expecting and what the buyer is expecting. Oh, nice. And let's let's go into more of the disadvantages as well, because those those are some of the things that I really want us to touch on. And I'm not I'm just remembering now that we didn't touch on those when we speak about auctions. Are they disadvantages? Are they specific ones that people should look out for? Well, there's a yes, there is a there's a disadvantage with each and every thing that you get yourself into, particularly with auction, you find somebody has been pre-qualified and they go into the bidding because they probably had an understanding of the reserve price and where the reserve price was going to end. But unfortunately for them, you find that the price go a much higher and they actually end up bidding at a much higher price than they even know the pre-qualification. And once they get out of the once they go back to their banks and say this is how much we took the bidding for, they have to go back now and look at what his background is. Is he going to be able to service his loan? Is he going to be able to get some of the equity money from maybe a private equity company? Does he have money that he's going to put down as his skin on the game, like skin in the game? So those type of things, they actually tend to disadvantage the buyer because you find a transaction is hanging and we're not able to close it because there's a lot of loose ends that were not tied or maybe that the buyer was surprised. Like to his surprise, he took a bidding. But he cannot raise the actual funding for the property that they're looking for. So that could be one of the disadvantages. No, definitely. I want us to really to jump into the myths now because, you know, there are myths that surround everything and especially in the property industry where people converse about this a lot. Talk to us about how people think that with auctions, you'll pay more. You'll pay more because people are motivated auctions. So property value might not have a say in terms of the valuation of the property. So the bidding might start at 100,000 rent for property that's worth 50,000. And, for example, so let's talk a little bit more on that. Well, I would say it depends when you say the property might be worth 50,000 rents. I mean, in your eyes, it might be worth 50,000 rents. But you find that the history that is attached to the property and maybe some of the bidders, when they come to the auction, they're not coming looking at the structure as it stands today, but they are looking at the future and the history of that property and how best they can actually position it into the market, position it back into into the market. So they look at how best they will be able to repose it and what sort of food traffic that property will be able to to attract. What type of an establishment can actually take off as one of the gems in those areas. So when bidders come to the auction, they're not they don't come with one mindset thinking that, OK, I'm going to pay the lowest price ever. But you must remember if one is thinking about the lowest price ever, the one is thinking about the history behind the property. The one is thinking about, you know, if I were to flip this property, this is the type of yield that I can produce from from from the property. So yes, there's different aspects to it. And that's why we say it is a competitive atmosphere where everyone comes with different ideas. And you see that that and it's that competition for me where I feel like how is it regulated, you know, especially when we are in that space where people are mentioning numbers, mentioning figures, you know, going at each other. Do we get to a point where and I'm just I'm just saying this for someone who hasn't been in the auction before, who might just wonder, you know, do we get to a point where we're like, OK, now this is where it stops because by the time we move from this bar, and this is the most this property can be paid for, like 500,000 is the most that this particular property can be paid for, considering the location, considering its its current value. Do we have such things happening in auctions? Yeah, well, auctions, online, physical, we are all regulated. Whichever way you look at it, we are regulated. And I mean, like I said earlier, that a different minds meet at an auctions table because they have different ideas on how best they can develop the property. Yes, if you go higher, you go higher because of what it is that you believe in and you believe the property will be worth or is worth, because sometimes, you know, there's a number of properties that I personally have seen and I think in that, oh, this is such a dilapidated building, it could sell for a year, 100,000. And you find the property is not selling because of the way it looks. But when somebody eventually finds interest in the property and understand the type of area the property is in, that's when it actually helps the buyer to decide on the price that they are willing to to pay for it. That's why we say an auction is like an auction is a buyer's willingness to buy at whatever price that they believe makes sense to them. All right. And before I let you go tonight, I want us to talk a little bit more about how if you are in this space and or if you want to prospectively acquire property through auctions, where is the first place I go? How do I go about it? If someone is watching us tonight and wants to get a property using an auction and wants to sell a property using auctions, how do they start? I think start with a real estate company. They will guide you. I know a lot of people tends to want to do something by themselves. I mean, we have people setting up stockpiles to buy properties, but they never even get around it. But I've since come across a group of women in Rustin Beck, who has set up a consortium, not even a consortium. They started off as a stockpile and they put money together. And what they did that they they used to invite brokers to come and advise them what would be an ideal property to buy. So you must remember that whatever you buy is influenced by your loan to value. However much you've got in your pocket, it doesn't necessarily get you, you know, the most the most beautiful of them all, but you have to get something that fits your pocket. And you have to also understand that once you get your first property, you will have gone through all the challenges of understanding and the knowledge about property and your second property becomes now something that you are pride in yourself. It's your pride and joy because you've learned so many mistakes and you don't repeat the same mistakes onto the next property. But make sure that you are very good friends with your banker as well, because we are scared to speak to the bank, speak to the bank, find out. OK, if my stock fell has put together so much money, how much can you lend us so that we are able to buy this property? You have individual investors as well who partner with your development companies, you find them buying certain types of properties so that they can refurbish them and go forward. But you find that they have a certain percentage that they they they have to pay they'd have to bring in as their skin in the skin in the game. So it it is something that you have to invest in yourself as well to understand what are the market trends? Where's the market headed to? Is it worth my while to buy a property in this industry or that industry? I mean, for instance, when you go back to 2020, one of the sectors that wasn't as expected was the industrial sector and which seems to be and I mean, it's proven itself to be the most critical for people to start investing in because you will never go wrong. You still need to store food. I mean, there's large companies that are looking for storage. There's large companies that are still looking for properties like that for their logistics. So you need to know, OK, do I start with a property that I'm going to be paying municipal rates and all of that from my own pocket or do I buy an investment property that is yielding at least so much income every month? And this income will be able to decide on your loan to value with the bank because banks also they want to see you being enthusiastic enough to understand your finances. It shouldn't be up to them trying to discourage you or empower you. But you also have to empower yourself with bringing something to the table because only then the bank is able to listen to you. There's funds as well that you can speak to that property funds that are that are buying a whole. I mean, they are willing to teach the newcomers. So the information is there. You have the internet. Everybody's gone virtual. I mean, you can even set up a zoom or virtual meeting with your broker. Yeah. No, definitely. Thank you so much, Luanda. So much insights that you have brought to us tonight. And I believe that with such information, one can really start looking at starting and going into the market by getting a house through an auction. You know, and one of the most important things that I feel you said is that in this space, it is how much the buyer is willing to spend for that particular property, how much they believe it's worth. And with such information, we will definitely be able to know how to know which which property to spend money on. And what exactly they're going to do with it once they have done so. Thank you so much for joining us. It was really a pleasure for us to have the conversation. Have a good evening. Thank you very much. Have a good evening. Thank you so much. Bye. Thank you. And just like that, we reached the end of our conversation tonight where we were talking auctions and their spike in South Africa and what really buyers and sellers need to know. And if you are a prospective buyer or seller, this is how you will probably start to get into the property space. And this is a way you could grow your property portfolio, you know, whether it's a bank repo, whether it's one of those one of those properties that has been liquidated. This it could be such a great way for you to start that property portfolio. Thank you so much for joining us tonight. Right here on the Private Property Podcast. My name is Dimi WM Jain. Thank you so much for joining us till we see you again next time every weekday, 7 p.m. Right here on the Private Property page. Have a good one.