How do I set my bid at a sheriff auction?

As a home buyer or investor looking for a discount to market value, you need to take the following into account when setting a bid level. Work through these four steps before the auction and decide on your maximum bid, so you don’t get carried away on the day.

1. Determine the market value

Using information such as the last sold price, nearby sales and speaking to local estate agents, determine the market value of the property. Our guide to conducting a desktop valuation explains how.

Check the gazette notice for a reserve price. If the property is the owner’s home, the court will often have set one, and a bid below it may not be accepted.

2. Decide what discount you want to get

Simply reduce the full market value by the percentage discount you are looking to achieve.

3. Subtract outstanding rates and taxes

These will need to be paid for separately and you must reduce your bid price accordingly. The sheriff will announce them at the auction, but if you prefer to get them in advance, simply call the transferring attorneys before the auction. Their contact details are in the Gazette entry.

4. Subtract the sheriff’s commission

The sheriff’s commission is a minimum of R3,000 and a maximum of R40,000 (excluding VAT), worked out as:

• 6% on the first R100,000
• 3.5% on R100,001 to R400,000
• 1.5% on the balance

Other costs to budget for

Remember that transfer fees, including transfer duty (or VAT), along with the transferring attorney’s fees will apply. Interest will also accrue from the date of the auction. See how to buy a property at a sheriff auction for the full list of costs, including the 10% deposit on the day. If you plan to sell the property on rather than keep it, see buying to flip, which works backwards from your resale price and includes a calculator.

Disclaimer: Please note the above information is for general guidance only and is not to be relied upon without conducting your own due diligence.