An auction property is a real estate that has been foreclosed by a bank or the High Court, mainly because the owner has failed to settle the payment for mortgages or quit rent.
Guidelines To Buying An Auction Property
- Identify your desired property according to your preferred location and budget.
Do take note of all relevant information about the property. - Conduct an external inspection of the property to ascertain the condition of the property.
- Conduct an official search with the relevant land office and make general enquiries with the developer or management office.
- Get a copy of Proclamation of Sale (POS) and Condition of Sale (COS).
Interested bidders are required to register their details with CIMB Property Mart prior to the auction. - Take note of the auction time, date and venue.
Prepare a bank draft or cashier’s order for the deposit amount, equivalent to either 5% or 10% of the Reserved Price, before the auction date. - On the auction day, ensure that you reach the auction venue early and register at the auctioneer registration counter.
- The auctioneer will announce the commencement of the auction, and then provide a briefing on the bidding process, read out the important clauses in COS and the property information.
- The bidder is to raise his/her bidding card to indicate the bidding price. The bidding process will stop when the highest price is called out three times by the auctioneer and no further bids are made. At the fall of the hammer, the property is sold.
- The successful bidder (the bidder with the highest offer during the bidding process) is required to sign the Contract of Sale and pay the difference in the deposit if there is an increment in the bidding price.
- The balance of the purchase price must be paid within the time frame given. If you are not the successful bidder, you may redeem your bank draft or cashier’s order at the registration counter immediately after the auction
Auction properties can be categorised into:
- Loan Agreement Cum Assignment (LACA) properties — properties without an individual title or strata title; their auctions will be conducted by banks.
- Non-LACA properties —properties with an individual or strata title; their auctions will be conducted by the court.
Risks Of Buying An Auctioned Property
- Losing your deposit
– Before you consider buying an auctioned property, ensure that you have enough cash allocated to pay the balance purchase price. - Making a bad investment
– Property prices and rental yields vary due to various factors - Trouble evicting previous occupants
– An auctioned property does not always come with vacant possession - Footing heavy outstanding bills
– You might have to pay for various outstanding bills, including water, electric, maintenance, quit rent and even assessment taxes that have not been settled previously. - Paying for costly repair works
– A property that is badly-maintained and is riddled with damages can rake up significant repair costs. - Buying a property with limitations
– Certain properties are allocated as Bumiputera lots, and you may not be able to transfer the property to your name if you are not a Bumiputera.
-There are also some properties with caveats in place.
