Situated at www.propertyauctions.co.za, the site launched last week and is already taking registrations for the first online auction, scheduled for later in May.

The online auction website is the brainchild of the same team that brought SA its only commercial and industrial property portal, www.eProp.co.za.

“It’s the first and only dedicated online property auction platform in South Africa, allowing for both the disposal and acquisition of commercial properties,” says eProp managing director Frank Reardon, adding that the site provides an electronic auction platform to sell office, retail and industrial property, and land for development. It may be one of just a handful of such sites in the world.

The aim of the business model is to keep property auctions both straightforward and simple, says Reardon.

For the seller, there is a small registration and listing fee. A 1% commission is payable on a successful sale. For the buyer, there is simply a small registration fee, with no additional hidden transaction costs.

“We found that conventional auctioneers charge high fees, sometimes up to 15% of the sale price. We wanted to keep transaction costs to the parties as low as possible to enable easy access for users,” he explains.

A key challenge was to address legal complexities around the concept of online property sales. A team from Werksmans attorneys were brought on board and have played a catalytic role in getting the project off the ground.

“In fact one of the unique features is that both buyer and seller are legally bound by the outcome of the auction, unlike conventional property auctions, which tend to favour the seller,” adds Reardon.

The business model has been designed to make quality commercial properties accessible to a wider audience. Online auctions do away with the geographical and time constraints associated with conventional auctions. Plus, online auctions are less pressured than traditional ones.

“These factors should achieve better prices for all involved,” he adds.

Security has been built into the business model as a priority. Both the buyer and seller are pre-qualified through a registration process and credit referencing, and detailed monitoring processes have been put in place.

eProp’s existing marketing channels, which target thousands of property investors, experts and space-users, will be used to spread the word about its new service offering and to save users the exorbitant marketing costs often associated with traditional auctions.