Auction

WHAT IS AUCTION PROPERTY
  • Auction houses are sold by licensed banks or individuals during transactions such as bank or
  • LPPSA auctions. Auction homes are often sold at cheap prices. Many Malaysian home buyers may get the impression that auctioned properties are less valuable than newly launched homes or secondary properties. They may perceive that these houses could have serious problems such as structural damages.
  • The most apparent benefit of buying a house at property auctions is that it could be purchased at a much lower price than a comparative property listed on the subsale market. Savings to be had has been seen to reach as much as 400% of a bank’s market value of a property at auction
ADVANTAGES OF AUCTION PROPERTY
  • Lower prices than the subsale market.
  • You may buy houses that had prior restrictions, such as low-cost houses. When they are auctioned off, these properties are usually sold without any restrictions.
  • Higher rental yields compared to subsale houses.
  • Various pricing options to fit your budget.
DISADVANTAGES OF AUCTION PROPERTY
  • Losing the auction or if the unit is called off. The unit owner may settle the unit’s outstanding payments and the bank may cancel the auction. This may occur even on the auction day.
  • Winning an auction at above market price. This may happen if you do not conduct a proper market research on property prices.
  • Rejection of housing loans.
  • Units that are severely damaged.
  • Outstanding utility payments by previous owners.
  • Refusal of previous owners to leave the unit, making vacant possession a tough process
BEFORE BUYING A AUCTION PROPERTY
  1. Check on your loan eligibility
    • This is one of the most important steps in any property purchase to prevent the loss of deposit. Check on your loan eligibility in advance at any nearby banks. Find out how much financing can be approved by the bank.
    • Why should you check on loan eligibility first? By knowing how much financing can be approved by the bank, you will be able to avoid paying for something you cannot afford
    • If you rush and do not check on your loan eligibility in advance, you may lose your deposit.
    • Even if you win the auction, if the loan is not approved your deposit will not be refunded.
  2. Comprehensive research on location
    • Conduct thorough research on the location of the house that you would like to bid for.
    • Regardless of whether the unit is for your own residence or investment purposes, you should do research on facilities and amenities within the area.
    • Among the important factors that require research are location, facilities, public transport as well as safety. Based on this research, you may make a comparison with your own objectives of owning the auction property.
    • For example, if you want this property auction house to be close to your work, location and safety could be decisive factors. On the other hand, you may want to rent this unit to students.
    • In this case, transport facilities such as LRT and MRT, as well as proximity to education institutions could be major factors in your consideration.
  3. Check on market prices
    • To ensure that you do not exceed your budget or make a bad purchase, study the market pricesof the house you want to purchase. You can use brickz.my which is the only property portal in
    • Malaysia that provides the latest information on sales value for subsale properties. Be careful in your calculations. Set the maximum price for your bid so that your transaction is worth it.
    • There’s no point in winning the auction at above market prices. In the long run, the transaction could be a losing proposition.
  4. Site visit
    • For reference on properties that you plan to purchase, get a copy of the Proclamation of Sale
    • (POS) and Condition of Sale (COS). Both documents will contain details of declaration and condition of the property that is being auctioned.
    • You can actually request to physically view the property beforehand if there is an existing tenant (with a tenancy agreement) occupying the premises. Many property investors or purchasers forgo this step as they expect owners/ tenants to refuse. Try your luck anyway – some owners welcome the chance of obtaining a higher bidding price and some tenants would want to continue renting from the new owner.
    • For further examination of the auctioned unit:
      • View the surrounding areas of the unit.
      • View surrounding units.
      • Check outstanding maintenance and utility bills.
  5. Set aside deposit and extra cash
    • You need to bring the following compulsory items on auction day:
      • Copy of identity card.
      • 10% deposit based on the price of the auction house. You may pay via bank draft or banker’s cheque at selected banks (refer to POS).
      • Additional funds in case the 10% deposit is insufficient for registration.