Illustration: Colin Daniel
Illustration: Colin Daniel
Illustration: Colin Daniel
Illustration: Colin Daniel
Illustration: Colin Daniel
Illustration: Colin Daniel
Illustration: Colin Daniel
Illustration: Colin Daniel

This article was first published in the fourth quarter 2016 edition of Personal Finance magazine.

My first sheriff’s auction was a bitter-sweet experience. My girlfriend and I were thrilled that we had bought our first home for R895 000. But shortly after we moved in, a suspicion that I had witnessed some devious goings-on at the auction were confirmed. I got chatting to our new neighbour, an estate agent, who, it transpired, had been at the same auction. She told me that, if it had not been for the shenanigans at the auction, we could have picked up the property for R670 000.

In 2006, my girlfriend and I decided to buy a house. We had some savings, but didn’t qualify for a mortgage bond much over R1 million. After viewing show houses religiously every Sunday, we realised that we couldn’t afford anything reasonable.

In early 2008, my mounting frustration at not being able to buy drove me to look at the distressed property market. Initially, I focused on Aucor and Auction Alliance auctions. Although these were held regularly, only occasionally did a property in the areas in which we were interested come up for auction. The properties were expensive. Over and above the transfer duty, you have to pay buyer’s commission, which can be as much as 10 percent (excluding VAT) of the winning bid. The sense I got from attending these auctions was that bargains are rare. The auctions are well attended, and, to ensure a steady flow of mandates, auction houses know that the properties have to fetch reasonable prices.

It was around this time that my attention turned to sheriffs’ auctions. What surprised me was the number of properties auctioned each month. In the areas in which we were interested, about six properties a month were going under the hammer. At the time, I thought this was because of the global financial crisis, but the numbers remain high to this day.

We visited every property listed in the areas in which we were interested, and, after about six months, my girlfriend and I found a house that we felt suited us. It was a three-bedroom, two-bathroom property on a half-acre in Hillcrest in KwaZulu-Natal. The property was vacant – the owner had absconded to Australia, leaving a trail of debts.

As with many vacant properties, the garden was a mess. Weeds were growing through the paving, the pool was green, the grass was overgrown and the flower beds were choked with alien vegetation. If the garden had been in better nick, I estimated the market value would have been R1.2 million. The judgment debt (the amount the owner owed to the bank) was R1.4 million.

Based on what we could afford, I decided I would bid up to R900 000. I would have to put down a deposit of 10 percent and pay the sheriff’s commission. Together, this would amount to R100 000.

The rules of the auction required that payment was made in cash or by bank-guaranteed cheque. My bank was prepared to issue a cheque for a guaranteed amount, but not a blank cheque guaranteed up to a certain amount. I phoned the sheriff’s office and asked whether it would accept an electronic funds transfer, but it flatly refused. The only option was to withdraw R100 000 in cash and carry it with me on the morning of the auction.

The auction was held in a small corner of a seedy warehouse in Pinetown. I hesitated over whether I should carry the cash with me or leave it in the boot of the car. I reasoned that a canny criminal might mug me, so I left it in the car.

A man arrived with a box of samoosas, announced that he was the auctioneer and said the auction would begin in a few minutes. He then announced that he was selling samoosas for R2.50 each.

I watched the discussions taking place around me. It dawned on me that I was witnessing a pre-auction of sorts. People were negotiating on which properties they were going to bid. One person in particular seemed to be very active – a tall, heavy-set man wearing purple shoes with curled tips that reminded me of the shoes worn by court jesters in the Middle Ages.

Eventually, the auctioneer had sold all his samoosas and got the proceedings under way by reading out the rules of the auction. No one paid any attention. By now, there were about 40 people in attendance and everyone was talking. I strained to hear the auctioneer, but eventually gave up.

The house on which I was bidding was fourth on a list of 10 properties. I was interested to follow the first three auctions closely to see who was bidding and what the properties went for.

The auctioneer read out the details of the first property. Someone, presumably a representative of the transferring attorneys, called out the outstanding rates and utility charges. The auction began in earnest, but it was not conducted in the way I expected. Instead of the auctioneer acknowledging bids and calling them out, the bidders faced one another and called out their bids themselves. It was as if the auctioneer wasn’t there.

Something else that surprised me was that the bidding started with an offer of R1 000 and grew in increments of R1 000. Only a few times did anyone increase the leading bid by more than R1 000. This meant that each auction took longer to complete than would typically be the case.

When the bidding on the first property was nearing its conclusion, the chatter died down until only the competing bidders could be heard. When only one bidder remained, the auctioneer uttered: “Going once … going twice … sold.”

By the time the fourth property came up, I had decided to bid aggressively from the start. I wanted to make it clear that I was dead set on acquiring the property and scare off other interested bidders.

The bidding started at R1 000 and quickly esca-lated to R10 000 before someone piped up with a bid of R500 000. This stunned the audience momentarily before the bidding continued in tranches of R1 000. I bid aggressively in increments of R5 000.

At R600 000, only three of us were bidding; at R660 000, two. I was facing off against a relatively well-dressed man in his 30s who I guessed was a representative of the foreclosing bank. I didn’t want to give him the impression that I was prepared to go much higher, so at R665 000 I grimaced and feigned a look of concern. Then, after gazing around the room with what I hoped would come across as a look of desperation, I raised my hand and bid R670 000. The chatter in the room stopped and all eyes turned to the auctioneer.

His eyes swept the room before he said: “Going once … going twice …” My heart leapt and I felt giddy as I realised that I was about to buy the property for R670 000.

Then “the jester” strode forward and shouted: “Stop the auction! Stop the auction!” The auctioneer glanced around uneasily, but made no attempt to address the disruption.

The jester held a discussion in heated whispers with three or four members of the audience before bidding R671 000.

“R675 000,” I countered.

“R676 000,” he responded.

The bidding continued until I no longer had to feign discomfort.

At R780 000, the jester sank back into the audience, and I once again thought I had clinched the property. At this point, the man who I assumed was working for the bank stepped forward and pushed up the bidding until it reached R891 000. I was thoroughly irritated. Something was wrong. Why would the person who bowed out at R670 000 step back in at R780 000 and push the bidding to R891 000?

I resolved to make one last bid for R895 000. The room fell silent and all eyes turned to the auctioneer. This time, quite quickly, he called out: “Going once, going twice, sold!”

Chaos erupted. It seemed that someone understood better than I what had happened. I headed straight for the auctioneer and explained that I needed to fetch my bank-guaranteed cheque from the car. I lied about the cheque, because I did not want to draw attention to the fact that I was carrying R100 000 in cash.

The auctioneer peered at me suspiciously. It seemed he was worried that I would make a break for it without standing good on my bid. After some pleading and negotiating, he agreed, but cautioned that the property would be re-auctioned if I failed to appear in 10 minutes.

As I left the warehouse, some people followed me outside. One person who was part of the jester’s crowd pulled me aside and said I must leave. He explained that he knew the auctioneer, and, if I failed to return, the property would be re-auctioned. He would pick it up for R200 000 less and split the difference with me.

I thanked him for his offer, but said I was happy with what I had paid.

It was only later that I realised that he and his colleagues had pushed up the price to put me off the house. Whoever won the bid would leave without honouring it, forcing the property to be re-auctioned, by which time, they hoped I would have long since left. It seemed that my persistence had unnerved them, although it cost me another R200 000.

The “pre-auction” I had witnessed were buying consortiums trying to allocate the properties among themselves so that competing bids would not drive up the prices. I have seen this at other sheriffs’ auctions, although it has never been as blatant as it was at my first auction in Durban.

The important thing is not to become distracted by these activities. Do your homework on the property in which you’re interested and decide on the maximum amount that you’re prepared to bid.

You will have an edge over the buying consortiums, because they are looking for properties they can flip at a profit, and will not be prepared to bid as high as someone who wants to buy a home.

If you are interested in buying a property at a sheriff’s auction, I recommend that, before you bid, you attend one or two auctions to get a feel for the process. Arrive early on the day of auction. Talk to the people there and find out whether any of them represents a bank or a consortium (they will normally refer to themselves as “private investors”) that wants to buy the property in which you are interested, so that you know who you will be bidding against.

How to find properties that are coming up for auction

When someone fails to pay a debt, the creditor may seek a judgment order from the courts. Once the creditor has obtained an order, the debtor’s moveable or immovable property may be attached by the sheriff and sold to the highest bidder to settle the debt.

By law, all sheriffs’ auctions must be gazetted. Each property is listed in a Legal B Gazette, which is published every Friday. At a minimum, the notices include a description of the property and its street address, any improvements to the property, the name of the plaintiff (usually the foreclosing bank), the name of the defendant, the case number, the date and time of the auction, the address where the auction will be held, the name and address of the plaintiff’s attorneys, and the address of the sheriff.

The Legal B Gazettes are available free online at A separate gazette is published for each province.

Wading through the Government Gazettes can be time-consuming. For example, the Gauteng Legal B Gazette often exceeds a hundred pages. Often, a listing includes the address, but not the suburb in which the property is located, so you have to look up the address to find out which area it is in.

The simpler ways to find properties are:

* Contact the local sheriff. If you’re interested in properties in a specific area, you can ask the sheriff for that area to put you on his or her mailing list. The website of the South African Board for Sheriffs ( lists the contact details of all the sheriffs by province and magisterial district.

Some sheriffs will simply email you a list of the properties on auction, whereas others have their own websites that provide additional information about the properties – though, generally not more than is in the Legal B Gazettes.

Often, the sheriff will notify you of the properties to be auctioned just a few days before the day on which the auction is held. This leaves you with little time to perform a due diligence on the property and get your finances in order. In my experience, you need at least a week to research whether a property is an attractive proposition. You may need longer where a property is in another province.

* Property websites. A number of websites provide details of sheriffs’ auctions. These include MyRoof (, which also has information about bank-repossessed properties and bank-mandated sales (where an owner gives a bank a mandate to sell a property on his or her behalf), and Private Property (

* Sheriffs’ listings. The most convenient way to search for sheriffs’ auctions is to use one of the sheriffs’ listings websites. The simplest and most effective are and Both cost R95 a month, although SheriffHQ provides limited access at no cost.

SAsheriff lists sheriffs’ auctions by province and suburb. It also has a search function that enables you, for example, to search by type of property (sectional title, smallholding, vacant land, and so on) and number of bedrooms.

SheriffHQ is more sophisticated than SAsheriff, because you can set up email alerts whenever a property is listed for auction in a particular suburb. It also has a property valuation tool, and you can view the information about a property contained in the Legal B Gazette.

Why it’s important to find out whether a property is occupied

No matter how financially attractive a property may be, if it is occupied by the owner and you don’t know the owner’s circumstances – for example, whether he or she has a place to stay and will move out once the property has been sold at auction – it could be a long time before you take possession of your property. At worst, you will have to go to court to have the owner evicted, which is an expensive and time-consuming process. To avoid this problem, I do not bid on owner-occupied properties.

Finding out whether a property is occupied, and if it is, by whom, is the most important and difficult part of researching a property. Here are some of my sleuthing tips:

Properties nearby

Finding out whether or not a property is occupied is relatively easy if you live close to it. If it is a free-standing home, it’s as simple as driving past in the evening and checking whether the lights are on. Often, a vacant property will be in poor condition. The lawn will be full of weeds, the flower beds will be overgrown and the post box will be jammed with unopened mail.

Things are a little more difficult if the property is situated in a complex. Some complexes have security guards at the gate who know the residents’ comings and goings and whether any of the units are unoccupied. Sometimes the guards will allow you to enter the grounds.

If none of the above works, I search online for units in the complex that have been listed for sale or rent in the recent past. If I find any, I phone the estate agents and ask if they would arrange for me to have access. Often, the agents know the complex well, or can put me in touch with a member of the body corporate who can assist. On more than one occasion, the estate agent has put me in contact with the tenant or owner.

Properties out of town

It can be difficult to find out whether a property is occupied when you do not live nearby. I find that a combination of approaches usually works.

The sheriff in the area is the best place to start, although, in my experience, they provide the least information.

If I have a friend who lives nearby, I ask him or her to drive past the house in the evening and check whether any lights are on, or to stop by on a Saturday morning and check whether there is a car in the driveway, or any other sign of an occupant. An overgrown garden or a green pool is usually a good sign that the house is unoccupied.

If the property is in a complex, I ask my friend to drop by on a Saturday morning and ask the security guards whether the unit is occupied. I also ask my friend to find out on which floor the unit is situated. This is important, because, apart from the size of the unit and the number of bedrooms and bathrooms, the floor on which the unit is located will have an impact on the value of the property.

Is the occupier the owner?

Once you know that a property is occupied, you need to find out whether the occupier is the owner or a tenant. This requires some real detective work.

A little trick I’ve learnt is to find out the details of the defendant. In most cases, if the defendant is a company or close corporation, the property will be tenanted. In this case, I feel more comfortable with approaching the occupant and telling him or her that I intend to bid on the property, and if my bid is successful, that I would like him or her to stay on. I also ask the tenant for the letting agent’s contact details, so I can verify what the tenant has told me about the terms of the lease.

Large complexes often have caretakers who can tell you whether or not a unit is vacant. If it is occupied, the caretaker may be able to tell you by whom and may be prepared to provide you with their contact details.

Another potential source of information is a managing agent. You might have to do some sleuthing to find out the name, but, in some cases, a Google search using the name of the complex will suffice. If it does not, search for a unit for sale or rent in the complex and phone the estate agent who posted the listing. Very often, the agent will be able to provide you with the name and contact details of the managing agent, as well as other information about the property.

If you track down the managing agent, he or she should be able to provide you with a vital piece of information: the outstanding levies, which will become the liability of the purchaser.

Two other sources of information are:

* The conveyancing attorneys; and

* The trustees of the body corporate, who are often keen to ensure that the property will reach the highest possible price at auction, so that the body corporate can recover any outstanding levies.

If you establish that the property is occupied by a tenant, you must establish the terms and conditions of the lease, and whether the tenant can be relied on to pay the rent.

Most tenants are relieved that the prospective owner wants them to stay on, but some try to improve their lot by saying they are paying a lower rent than they actually are. It’s not always wise to take tenants at their word, so you should ask them, or the rental agent, for a copy of the lease.

How to avoid properties that need costly repairs and maintenance

The second major risk that I want to mitigate is being saddled with having to carry out expensive maintenance and renovations. For this reason, I buy sectional title properties without gardens or swimming pools in relatively new developments.

One way to ascertain the age of a sectional title development is to look at its scheme number, which begins with “SS”. For example, “SS75/2011” indicates that the scheme was built shortly before, or in, 2011, which is when the scheme was registered. Bear in mind that this method is not infallible, because a complex may convert to sectional title many years after it was built.

How to establish what a property is worth

A number of websites provide property valuation reports based on deeds office records. An example is PropIQ ( Many of these sites are not subscription-based, so you can draw a report for a relatively small fee.

These reports contain a wealth of information, for example:

* The size of a property;

* An estimate of a property’s lowest, median and highest value;

* The most recent municipal valuation;

* Registered transfers – when a property was last sold, for how much it was sold, and whether any mortgage bonds are registered over the property;

* Comparative information on the most recent sales of units in a sectional title scheme, as well as in neighbouring schemes;

* The average selling price and the total number of sales in a suburb; and

* The amenities in the area.

How to calculate how much to bid

How much you are prepared to bid depends on why you want to buy the property. My goal is to acquire buy-to-let investments, so I focus only on properties that will be cash-flow positive from day one and that have low outstanding levies and rates, because the buyer has to settle these in cash (they cannot be financed). I also focus only on sectional title properties that are not situated on the ground floor, because I do not want the hassle and expense of garden maintenance.

What follows is the method I use to buy properties at sheriffs’ auctions. It is based on my experience and on what I perceive to be a fair return for the work involved and the risks taken. You may find that another method works better. Bear in mind that market dynamics differ from province to province and from suburb to suburb.


Fundamental to my maximum bid price is the rent the property is likely to earn and the monthly levies and municipal rates and tariffs I will have to pay. Once I have these figures, I calculate the initial maximum bid price by dividing the annual estimated rent by 15 percent. For example, if the estimated annual rent is R60 000, the initial maximum bid price will be R400 000. In other words, I use a rental yield of 15 percent to determine the initial maximum bid price. (The yield is the gross annual rental income on a fully let property expressed as a percentage of the purchase price of the property.)

I decided on this yield more by accident than design. The first unit I bought at a sheriff’s auction had a yield of 19.6 percent on the hammer price, and an after-costs yield of 12.5 percent. So I have used 15 percent as a starting point. I know this is fairly high in the context of average residential property rental yields in Johannesburg, but, apart from my house, the all the properties I’ve purchased at sheriffs’ auctions have been one-bedroom units.

Once I have calculated the maximum bid price, I subtract the sheriff’s fees, the outstanding levies and rates and an estimate of the cost of repairs, to arrive at a revised maximum bid price.

I then test the revised maximum bid price against:

* The market value of the property as determined by an online valuation tool.

* The cash flow generated after subtracting the monthly mortgage bond repayments (assuming a deposit of 10 percent), the levy, municipal rates and the agent’s fees.

* The age and attractiveness of the complex. Generally speaking, well-cared for developments are properly managed and are in a reasonable-to-strong financial position.

* The amenities in the complex – for example, a swimming pool, tennis court or gym.

* The attractiveness of the surrounding area.

* Where the property is located. Is it conveniently located close to transport links, shopping centres, schools and hospitals?

* Whether the development is located in a high-capital-growth suburb.

The final maximum bid price is generally a result of the revised bid price and subjective judgment based on the above factors.

Although it may be tempting, or necessary, to bid above your maximum price to secure a property, you should be careful not to become carried away. Setting a maximum bid price ensures that you will secure a property that will provide you with an adequate return for the risk you are taking.

Clearly, a yield of 15 percent will not work for every property, and you may lose out on acquiring properties if you stick to this yield rigidly. In highly sought-after areas, where there is significantly less risk (that is, high-value suburbs and new developments where the unit is unoccupied), you need to use a lower yield to calculate the maximum bid price.

Finally, be prepared to lose out on some properties. You will not be able to acquire every one for which you bid, because, for example, some people will perceive value where you do not. In my experience, I acquire one in every five properties on which I bid.


If you want to flip the property for a profit, you need to consider your desired profit after settling all costs. The rental yield is not relevant. Instead, the prices of units sold recently in the development are a key indicator of the price the unit is likely to fetch.

To calculate your maximum bid price, you must subtract the cost of the unit and all the associated costs from the estimated selling price, including the margin you aim to achieve. It’s important to factor in all costs, because any oversight will reduce your expected profit.

How to bid if you cannot attend the auction

You will need someone to bid on your behalf if you aren’t free to attend auctions during the week. If you’re considering buying properties in another town or province, it may prove difficult to find someone who can attend auctions on your behalf regularly.

There are companies that will bid on your behalf. Some even offer to perform a due diligence on the property prior to bidding. These companies charge a percentage of the cost of the property if it is secured at auction – typically in the region of 10 percent. This can be a substantial sum – if you secure a property for R1 million, the fee will be R114 000 (including VAT).

I prefer to do the sums myself and use an agent when the property is in Gauteng, because I don’t have a close friend or family member who lives there and has the freedom to attend auctions regularly.

If the property is in the Eastern Cape or the Western Cape, I ask a family member or friend to bid on my behalf.

If the agent attends the auction, but doesn’t secure the property, I pay her R1 000 for her efforts. If she secures the property, I pay her R5 000. If the property is tenanted, she also earns a once-off fee of 10 percent of the annual rent if she secures a new lease with the existing tenant.

In order to bid on my behalf, the agent requires a power of attorney (you can find a template online), which includes my full name, identity number and residential address and confirms that the agent has my authority to bid on my behalf at auction on the particular unit up to a specified amount. In addition, I provide her with documentation for Fica purposes – for example, a copy of my identity book and of my latest municipal account.

It’s important that you stipulate the maximum amount the agent may bid and emphasise this amount in the covering email.

Another tip is to ask the person bidding on your behalf to phone you when the bidding is about to start. On one or two occasions, the agent has told me that I missed out on property, because the ceiling I had stipulated was slightly too low. By participating in the auction over the phone, you can decide whether to bid above the ceiling.

What you must do if your bid is successful

If the hammer falls on your bid, you need to attend to a number of things before you can celebrate your purchase.

The first is to complete and sign the purchase agreement, called the “conditions of sale in execution of immovable property”.

The purchase agreement includes:

* A description of the property (the physical address, the erf number, the size of the property, and so on).

* The conditions of payment. The following conditions are generally specified:

– Deposit: Typically, a deposit of 10 percent of the purchase price must be paid immediately to the sheriff. The agreement will stipulate which methods of payment are acceptable (for example, bank-guaranteed cheque or electronic funds transfer).

– Bank finance and occupational interest: A bank guarantee (if a bank will finance the purchase) needs to be provided to the sheriff within 21 days of the auction. The agreements to which I have been party provide that occupational interest will be paid to the sheriff if the property is not registered within one month of the date of sale.

– Liability for costs and outstanding municipal and body corporate charges: The purchaser is liable for all outstanding rates and taxes and other amounts due to the municipality or body corporate. It is important that you know what these amounts are before you bid and factor them into your maximum bid price, because they can be substantial.

– The sheriff’s fee, which must be paid immediately.

Once the agreement has been signed, and the deposit and the sheriff’s fee have been paid, you are entitled to take occupation of the property.

Your next step is to secure your property.

If the property is unoccupied, I recommend you have a locksmith change all the locks. This will prevent anyone else, including the former owner, from gaining access to the property. If the property is in a complex, you may have to arrange for the locksmith to be granted entry. Typically, this is done by contacting the managing agent or the chairman of the body corporate. They may ask you to send them a copy of the signed purchase agreement.

In the case of a freestanding property, you may want a technician to service the gate motor and reprogram the remotes. If the house has an alarm system, it is worthwhile contacting the security company and having the alarm reactivated.

You may have to have the water and electricity supply restored. You will have to visit the municipality and settle the outstanding rates and other charges of the previous owner. You will have to open a new account in your name and pay a deposit.

* This article is an extract from Greg Tarrant’s guide, Sheriff Auctions: How to Purchase Property at Sheriff Auction & Tax Tips and Tricks for Residential Property Owners, which is available from in Kindle format for US$4.55.