Key takeaways
- An auction sells your property on a fixed date to registered bidders. The sale is concluded at the fall of the hammer, or on your confirmation where the conditions of sale provide for it, and it does not wait for a buyer's bond to be approved.
- An estate agent sells by private treaty: offers arrive one at a time, are negotiated privately, and are often subject to conditions such as bond approval or the sale of the buyer's own home.
- Auction tends to suit property that is hard to price, has to sell by a date, or belongs to an estate or a business. Private treaty tends to suit an ordinary home in an active suburb, where most buyers need a bond.
- On auction you agree a reserve in advance and the property does not sell below it. With an agent, your floor is simply the offers you turn down.
- Neither route is cheaper by definition. Auction carries an appraisal fee, a listing fee and commission on the sale price; an agent normally charges commission as agreed in the mandate. Get both in writing before you sign.
The two routes side by side
Both routes end in the same place: a signed sale agreement, a conveyancer and transfer in the deeds office. What differs is how the buyer is found, how the price is set and how firm the deal is on the day it is signed.
| Question | Auction | Estate agent (private treaty) |
|---|---|---|
| When it sells | On the advertised auction day, about three to four weeks after you sign the mandate | Whenever an acceptable offer arrives; there is no set end date |
| How the price is set | Registered bidders compete in the open | An asking price, then negotiation with one buyer at a time |
| Buyer's finance | Arranged before bidding; on our property auctions the sale does not wait on a bond | Offers are often subject to bond approval |
| When it binds | At the fall of the hammer, or on the seller's confirmation where the conditions of sale provide for it | When the offer is accepted, but it lapses if a condition fails |
| Your floor | A reserve agreed in writing before the auction | The offers you decline |
| Viewings | Concentrated into set times before the auction | Ongoing, for as long as the property is listed |
| Your costs | An appraisal fee, a listing fee and commission on the sale price | Commission, as agreed in the mandate |
| Privacy | Advertised to the public, unless it is an invitation-only closed auction | Can be marketed quietly |
Neither column wins every row, so take them one at a time.
Speed: a date versus an open-ended wait
On auction, the sale date is fixed when you sign the mandate. With us, a property typically runs three to four weeks from signed mandate to auction day. The law sets a minimum as well: unless it is an invitation-only closed auction, an auction that includes immovable property must be advertised for more than five business days before it starts (Consumer Protection Act Regulations, regulations 19(3)(b) and 33).
With an estate agent, nobody can give you the date. The property sells when an acceptable offer arrives, and then you wait again while that buyer applies for a bond.
After that, both routes run at the same pace. Transfer goes through a conveyancer and the deeds office, typically two to three months, depending on the deeds office and any bond cancellation. Before registration, the municipality has to issue a clearance certificate showing that rates and service charges for the previous two years are paid (Municipal Systems Act, section 118).
Give your bank notice early
If the property is bonded, tell your bank you intend to cancel as soon as you decide to sell, on either route. Where the bond is a variable-rate home loan in your own name, the National Credit Act caps the early termination charge at the interest for three months, less any notice you gave (section 125(2)(c)(ii)).
The Act does not cover a bond granted to a company, a close corporation, or a trust with three or more trustees or a company as trustee (sections 1 and 4(1)); there, the loan agreement sets the charge. Either way, ask your bank for its notice period and charge in writing. On auction the timeline is shorter, so early notice matters more.
Certainty: suspensive conditions versus a binding bid
Private treaty: an offer with conditions
Most private treaty offers carry suspensive conditions. The usual ones are:
- the buyer obtaining bond approval within a set number of days
- the buyer selling their own property first
Until those are met, you have a deal on paper, not a sale you can plan around. If the bond is declined or the deadline passes, the agreement generally lapses and you are back on the market, weeks later.
Auction: no waiting on the buyer's bank
The Consumer Protection Act says a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in another customary manner (section 45(3)). On our property auctions the sale does not wait on the buyer's bond: the successful bidder signs the conditions of sale on the spot and is liable for the deposit there and then, and for any buyer's commission as those conditions set out. A bidder who needs finance has to arrange it before the auction, and the balance is secured within the period set in the conditions of sale.
Some auctions, depending on the seller's instructions, take the highest bid subject to the seller's confirmation within a set period instead. Where that applies, the conditions of sale say so, and the decision in that window is yours, not a bank's.
None of this is a guarantee: a buyer can still default, and the conditions of sale set out what happens then. But a signed sale with a deposit paid is a far stronger position than an offer that depends on a bank.
Price discovery: competition versus negotiation
An estate agent sets an asking price from comparable sales and negotiates with each buyer privately. A well-priced home in a busy suburb can do very well this way.
An auction asks every registered bidder at once, in the open. Each bidder can see the competition, and that pressure is the whole mechanism. It earns its keep where there is no obvious comparable: a farm, a large stand, a commercial building, an unusual house.
The reserve is your safety net
We agree a reserve with you in writing before the auction. It is not published, and if bidding does not reach it the property does not sell. The Act requires bidders to be told in advance that a sale is subject to a reserve (section 45(4)), so a reserve is a normal, disclosed part of an auction. More in our guide to reserve prices.
What bidders add up
A serious bidder adds the buyer's commission and transfer costs to the hammer price before deciding how high to go. Deposit and commission are set in each auction's conditions of sale, not at one rate for every sale; see buyer's premium explained. The honest risk is a thin room: with only one serious bidder there is no competition to lift the price, and the reserve does the work.
What each route costs you
Look at what you carry, and at what the buyer carries, because a buyer's costs affect what they can offer. Read the contract line by line: it decides who carries each certificate and clearance.
| Cost | Auction | Estate agent |
|---|---|---|
| Selling commission | Commission on the sale price, set out in writing, with when it is due, before you sign | Commission as agreed in the mandate |
| Other seller fees | An appraisal fee and a listing fee, in writing before you sign. Ask when each is payable, including if the property is passed in | Normally none, but read the mandate |
| Buyer's commission | Where the auction charges one, the successful bidder is liable for it, as set in the conditions of sale | Generally none |
| Transfer duty | The purchaser is liable for it | The purchaser is liable for it |
| VAT, if the seller is a VAT vendor selling property of its business | Payable instead of transfer duty and accounted for by the seller; bids are treated as including VAT unless the conditions of sale say otherwise | The same; the offer to purchase should say whether the price includes VAT |
| Bond cancellation, rates clearance, compliance certificates | Usually the seller's; the conditions of sale say | Usually the seller's; the offer to purchase says |
If you are registered for VAT
A sale attracts either transfer duty or VAT, never both (SARS). If you are a VAT vendor and the property forms part of your business, it carries VAT. You account for that VAT to SARS, and a price that says nothing about VAT is treated as including it (VAT Act, section 64). So make sure the conditions of sale, or the offer to purchase, say whether the price excludes VAT, and speak to your accountant before you sign.
The buyer's side is set out in the costs of buying property on auction.
Privacy and what the market sees
An open auction is public by design. The regulations prohibit selling anything by auction unless it was advertised so that the general public had a reasonable chance to learn about it (regulation 19(1)). The exception that matters here is a closed auction, where invitations go only to a finite list of buyers (regulation 33). Where the sale is not a normal, voluntary disposal by the owner, an estate or an insolvency for example, the rules of auction must provide for the auctioneer to announce the reason during the auction (regulation 21(2)(i)). Results are visible too: our auction room publishes completed auctions.
A private treaty sale can be as quiet as you like: a short list of buyers, no board outside, no portal listing, and a negotiation nobody else sees.
One related risk is worth naming. If a property is passed in because bidding did not reach the reserve, the market has seen it. That is the auction version of a listing that has sat on the portals for months. A realistic reserve, agreed on evidence, protects you against both.
Which properties suit auction
Auction tends to earn its place where one or more of these is true:
- The property is hard to price. Farms, smallholdings, development land, commercial and industrial buildings, and homes with no real comparable nearby.
- There is a deadline. A relocation, a business that needs the capital, or another fixed date.
- Someone has to show a fair process. An executor answering to heirs, a trustee or liquidator answering to creditors, co-owners who do not agree. In an insolvent estate the trustee sells as the creditors direct, and where they have given no directions, by public auction or public tender (Insolvency Act, section 82(1)). See estate auctions and selling deceased estate property.
- The likely buyers have finance in place. Tenanted property, portfolios and commercial stock, where buyers are used to committing on a date.
- The property has already stalled. A listing that has sat for months often needs a firm date and a fresh audience more than another price cut.
The property auctions page lists what we take on, anywhere in South Africa.
When private treaty is the better choice
If auction is not right for a property, we say so instead of taking the mandate. Private treaty is usually the better route when:
- It is an ordinary home in an active suburb. Plenty of recent comparable sales make the price easy to set, and an agent with good buyer traffic can achieve it.
- Your buyers will need a bond. First-time and entry-level buyers usually cannot commit before the bank answers, so an auction narrows the field. Our guide to buying on auction with a bond explains why.
- You have time. If you can wait for the right buyer, the main thing an auction offers, a date, is worth less to you.
- You want discretion. An open auction is advertised to the public by design; a quiet sale to a short list of buyers is simpler by private treaty.
- Your number is well above the evidence. An auction will show you quickly, and in public, that the market disagrees. Testing the price privately first is gentler.
Our property desk sells both ways, on auction and by private treaty through Dynamic Real Estate, so the advice does not depend on which mandate we get.
Using both routes, and how to decide
The routes are not sealed off from each other. A property listed for auction can attract offers before the day: Dynamic Real Estate takes online offers and pre-auction bids. If bidding stops short of the reserve, you can consider a post-auction offer, re-list for a later auction, or sell privately.
If you already have an agent on a sole mandate, read it before you instruct an auctioneer: depending on its wording, commission may still be claimed if the property sells another way during its term. If the wording is unclear, ask an attorney.
Check the certificate before you sign a mandate
Any estate agent you consider should hold a Fidelity Fund certificate issued by the PPRA. Under the Property Practitioners Act, nobody may act as a property practitioner without one (section 48), and a practitioner without one is not entitled to be paid for that work (section 56). Ask for the certificate number and check it with the PPRA. Ours, issued to us as an auctioneer, is on our credentials page.
Five questions to settle it
- Does the property need to be sold by a particular date?
- Is it hard to price, with few true comparable sales?
- Are the likely buyers investors, businesses or others with finance already arranged?
- Do you need a process you can show to heirs, creditors or co-owners?
- Are you comfortable with the sale, and its result, being public?
Two or more yeses usually point to auction. With one or none, an agent is probably the better place to start. Either way, tell us what you have and we will give you a price guide and a straight answer on the route. The auction route itself is covered step by step in selling property on auction.