IN the dark days of Finsac, when Jamaica’s economy was flatlining and people were losing property they had spent their entire lives acquiring, it could be risky to run a company that does real estate auctions. William Tavares-Finson, current chairman of D C Tavares & Finson Realty, recalls their office being firebombed and picketed back then. These days, he says, his job is a lot less exciting.

Fewer properties have been going on the auction block, a combination of more stringent rules that minimise risky loans and the consolidation of Jamaica’s financial institutions over the last few decades. But are there still deals to be found, so is buying property at auction an opportunity within reach of the ordinary Jamaican?

The Jamaica Observer’s Real Estate on the Rock got answers from Tavares-Finson. His comments were based on personal experience and general observations of what is happening at other firms, based on advertisements of property on offer. Read on for the conversation, which has been edited for clarity.

How is business in the local property auction market?

William Tavares-Finson (TF): This has been probably the slowest 15 years that we have seen in the auction market. In the 1970s, 80s, 90s, we used to have an auction every Thursday, religiously. Nowadays we are seeing auctions more like twice or once for the month, maybe, which is a reflection of several things.

It’s a reflection that the institutions tightened up their practices in the last decade or two.

We don’t have as many financial institutions as we used to have. Back in the 80s and 90s we had lots of different institutions lending money and giving out mortgages and loans. Generally, the practices were not as stringent and so the defaults were higher. That has been cleaned up by government regulation and banking regulation now so that you don’t see as much of the wayward loans as we used to see.

Also, in the old days we used to find that there were habitual defaulters. A person would borrow from one institution, they would run into default, and then some other institution would gladly pick them up, pay off the loan, and they would default again. They could bounce through several institutions. Now, they don’t really have that much choice [because the pool of institutions is smaller] and because of the interlinking of the financial system. People get a pretty decent idea if somebody’s credit is poor, so that doesn’t happen as frequently.

The perception is that people who buy property at auctions are generally wealthy. Is it something for the ordinary man and are there deals to be had?

TF: Let’s do the basics: 90 per cent of the auctions are based on powers of sale, meaning that somebody is in default on their loan. What happens then is that the institution, under the powers of sale in a mortgage, moves to put the property up for auction.

In the other 10 per cent of cases, some auctions may be court-ordered, also because a loan has defaulted, but in that case, instead of powers of sale, the court has made instruction.

It may also be that the property is being auctioned because there is a divorce, and it was chosen as the way to dispose of the property, or the properties have been seized under the Proceeds of Crimes Act (POCA). So there are other ways, but 90 per cent of them, it’s powers of sale because of a mortgage default.

Generally, what you see on TV is usually the auctioning of goods and chattels, where the auctioneer talks fast and they run through the sale of whatever item they have. In real estate, it’s done a lot slower.

All properties have a reserve price, which is the minimum that must be met or surpassed for the property to be sold. It is set by the institution based on a valuation that they do on the property. In putting the property up for sale they are guided by the equity of redemption, meaning that institutions have to make as good an attempt as they can to get as close to market value as possible.

A lot of people feel that when they’re buying at auction they’re coming there for a steal. In general, that’s not necessarily going to be the case, but what they do have is an opportunity to buy property that may not necessarily have come up on the market voluntarily.

Whether the buyer is rich or poor is neither here nor there. It depends on the property, and mostly it depends on whether the buyer has money aside for the deposit.

The deposit is a percentage [of the cost], and these days I’ve seen it vary from 10 to 25 per cent. You can get mortgage financing for the rest.

You mentioned that property auctions tend to be a lot less exciting than they appear on TV. Has there been, over the years, anything exciting about the process?

TF: It’s an unfortunate circumstance, because in many instances you are carrying out the sale of somebody’s home or their offices.

But, as I try and explain to people sometimes, you can’t blame the auctioneer. I’m like, to some extent, the funeral home. You can’t blame the funeral home for burying Mr Johnson because he died. You can’t blame me for doing an auction because it was sent to me. It’s between you and the institution — most people understand that.

The most interesting thing that happened was during the Finsac period.

Things had [got] very heated because the institutions were putting up auctions, taking on people’s businesses.

Somebody who was trying to prevent his property from being auctioned actually firebombed the office to try and stop the auction. Then we had another occasion where they picketed the office with placards and tried to again frustrate the auction process; so, it’s not completely boring.