If you have read our guide on "How to conduct a desktop valuation of a property," you will know that the easiest properties to value quickly are sectional title properties in complexes with a large number of similar units.
Unique properties require more research
This is where Sheriff Auction properties offer the greatest potential for finding a bargain. Since these properties are more challenging to value, other bidders may be more cautious in their bidding. Furthermore, if you have conducted your own research and discovered special features or improvements that have not been advertised, you are in an excellent position to secure a great deal.
Here are some real life examples
An empty piece of land was up for auction. The Sheriff only knew the address and the stand size. The lucky buyer conducted his own research by inquiring with the local council about the planning permission of the plot. He discovered the property had planning permission to build a sectional title complex. This knowledge made all the difference, as he was likely the only bidder aware that the property was worth around R4m rather than the assumed R1m. Imagine the potential profit of acquiring the property for R1m. The buyer basically made R3m instantly because he knew something special about the property that no one else did.
A sectional title property was being auctioned in a complex where there were quite a few similar sized units. The recent sales in the complex where around R2.2m. Everyone at the auction assumed the properties were all similar, but the one going on auction was a ground floor unit and had a huge garden with a private pool. The buyer was able to pick it up for R2.2m and sold it three months later without doing any work on it for R3.4m.
While some properties are easy to value from your desktop, its the more unique properties that require some extra effort to research, which offer the best opportunity to make money, by far!
Here is great a tip
When doing extra research on a property, sometimes you can get lucky by searching for it on property websites. Quite often, people who are defaulting on their loans try to sell their property before it goes to Sheriff Auction. If so then you may well find their listing online and be able to see internal pictures or even contact the agent who was trying to sell it to find out even more information.