What are property auctions?
An auction property is a piece of real estate that’s owned by a bank and sold at auction. This means that the property has been foreclosed on and been repossessed by the bank or a court, usually because the previous owner could not settle the outstanding payments on the property.
Types of auctions in Malaysia?
Two types of auction in Malaysia:-
- Judicial auctions (ie. high court auctions)
- Regulated by the National Land Code 1965
- title of the property is issued by the land office
- to auction off the property, bank would create a charge which is perfected in favour of the bank. Here, if the borrower defaults in paying his loan, the bank is entitled to obtain an order from the High Court to put the property for auction.
- A court order is require, where the court will sign Form 16F which is the Certificate Of Sale By Court.
- Non-judicial auctions (ie. bank auctions)
- Not regulated by the National Land Code 1965
- Title of the property is not issued by the land office
- To auction off the property, the property will still be held under a master title registered under the name of the developer. if there is no individual title/ strata title, the borrower will sign a loan agreement cum assignment (“LACA”) when taking up a loan from the bank. This LACA usually comes with a “power of attorney” to grant bank with the power to auction your property if you fail to settle your loan.
- A court order is not required.
Starting price for auctioned properties?
Depends on the type of property. However, usually the auction price generally starts at the market price determined by property valuers. The property price is the reserved price which will clearly be stated in the Proclamation of Sale (POS).
How to know how much the market price is then?
The market price of the property can be verified personally, by doing your own research and visiting property websites.
Note: Check on the size of the property stated on the POS and cross-check with those of similar sizes via the property websites. This would be an accurate method especially when it comes to high-rise properties such as condominiums or apartments where prices of similar units in the same building which are built at the same time are most likely consistent and would not differ a lot.
What if the property isn’t sold after the first round of auction?
There will be a subsequent auction after approximately a month in which the reserved price will be 10% lesser than the reserve price during the first round of auction, the process will repeat until the property is sold out.
Can you bid in the auction yourself?
Of course you can! A long as you are 18 and above and of sound mind (which means you’re not crazy and able to think properly), then feel free to register yourself to bid in an auction.
