A
uctioned
ByMichele Theseira
There
are many ways andmeans to go
about buying a piece of property, whether
to live in or as an investment. However, looking
at today’s rising costs of living, property prices
included, belts need to be tightened inmost cases,
andmarried couples both need to work in order to
enjoy a comfortable lifestyle. Still, there are those
withmoneymaking blueprints and financial
freedomplans, always on the lookout for good
investments to increase their wealth and enjoy
life's comforts. A clever way to grow one’s fortune
is by investing in auctioned property.
This article will explain the basics of auctioned
residential property. Part 2 next Friday will include
evenmore exciting insights like the benefits and
risks, the dos and don’ts and additional important
information no property buyer should turn a blind
eye to.
Proclamation of sale
Log onto the Internet to search for auctioned
properties but don’t get carried away by the
numbers, dollars and cents included. Renowned
investment guruMilan Doshi shares his thoughts.
“For property investors, auctions are a great place
to buy properties at bargain prices. To achieve
success using this strategy, youmust be fully
educated on all aspects of auctions. Knowledge
makes the difference betweenmakingmoney and
not makingmoney.” He advises the first timer to
first understand how auctions come about, and
what goes on at the credit or legal departments of
banks before a property is put up for auction.
>The rising costs of livinghas ignited a trend amongst property
investors andhomepurchasers. Still, thorough ‘homework’ needs to
bedoneor your purchase could comewith ‘a canofworms’
residential
buys
PART 1
There are all sorts of property types up for
auction. From residential to commercial, even
land. “One can bid for residential auctioned
properties via auctions hosted by the Land
Office or the High Court, through Loan
Agreements CumAssignment (LACA)
auctions conducted by private licensed
auctioneers on the instruction of the assignee
(financial institution), or via private auctions
conducted by licensed private auctioneers on
the instruction of private property owners,”
informs the director of the establishedHenry
Butcher Asset Auctioneers Sdn Bhd, Tang
CheeMeng. The latter choice is apparently
more common in advancedmarkets like
Australia and Singapore, Tang believes.
“These kind of properties are not ‘distressed’
and are not necessarily associatedwith a
foreclosure. This method also encourages
competitive bidding to secure the highest
price possible for the property,” Tang adds.
And sure enough, we hear that more and
more buyers and sellers are turning to
auctions these days.
The choice is yours
While the choice might be yours
when it comes to buying a property
through an auction or not, the
choices available are also
plentiful, spilling over. With the
abundance of choice, it is
sometimes harder to come to a
decision. Nevertheless, it is
always good to do one's
homework, not only on the
auctioned property you have
set your mind on, but on the
private licensed auction firm to
deal with, and other parties
involved in your purchase.
“These days, there are
more home owners opting to
buy and sell properties at
auctions. As an example, there
was a piece of land in Puchong
area that was valued between
RM200K to RM300Kwhich fetched
RM500K at an auction,” informs
LeongWye Hoong of Leong Auctioneer
Agency. However, Henry Butcher’s Tang
feels that although there is possibility to
buy properties at prices below the market
value at auctions, one must take heed of
the procedures, terms and conditions.
“There are surely pros and cons: like
property can be cheap, but propertymight
also be occupied and the successful bidder
will have to go through the legal hassle of
evicting the occupant/s. Moreover, there
may be hidden costs in the formof
outstanding outgoings etc.,” Tang adds.
He also urges those who intend to buy/sell
auction properties to get familiar and
understand the whole process and not go
into it blindly. He says there is the option
of getting a reputable real estate agent to
advise and bid on one’s behalf at an
auction. The real estate agent’s fee is
usually paid by the bank. For banking
procedures and documentation, check
out the AmBank andHong Leong
Bank websites.
From foreclosed and repossessed
properties, vacant possession, caveats and
more, don’t miss out on valuable tips from
property experts and those experienced in
auctioned property, in next Friday's
property insights page.
ON
friday
sept 13, 2013
TIp:
If you want to learn the
procedures and get a feel of the
auction process, it’s advisable to attend
a few auction fairs held in hotels by
the real estate agencies. Members of
the public are allowed to sit behind in
the auction room. This way you can
observe from a safe distance. In the
courts, only bidders with bank drafts
are admitted into a room where
the auction is held. No one else is
allowed in. – Milan Doshi
DID YOU KNOW:
Foreigners will be subject to
the prevailing guidelines
governing foreign purchase
of properties in Malaysia ie.
foreigners cannot purchase
low and low medium cost
properties or Bumiputera
units. Moreover, the
property must be priced
above the minimum
threshold price ie. RM
500,000. (In Penang the
minimum price threshold is
RM1m for strata residences
and RM2m for landed
residences.) - Tang Chee
Meng, Henry Butcher Asset
Auctioneers Sdn Bhd
Terms & Conditions
for buying property
at an auction
•
Auction properties are sold
without vacant possession and
buyersmay have to take legal
action to evict a hostile owner
or tenant
•
Prospective buyersmay not
be able to view the inside of
the property
•
Theremay be some hidden costs
to be borne by the successful
bidder. He is usually required to
bear all outstanding quit rents,
local authority rates (annual
assessments), maintenance
charges and utility bills although
for LACA auctions, the banksmay
absorb the outstanding quit rents,
assessments andmaintenance
charges up to the auction
•
The reserve price set at the first
auction is usually at or close to
themarket value. The reserve
prices at subsequent auctions
will be reduced, usually by 10%
at each auction although this is
not obligatory
•
The bidding deposit is usually 10%
of the reserve price but sometimes
can be set at 5%
•
Successful bidder is required to
top up deposit to 5% / 10%of the
successful bid price immediately
after the auction
•
Balance of purchase price is to be
settledwithin 90 to 120 days of
the bid being successful,
depending on the bank
•
The assignee reserves the right to
withdrawany property at anytime
before the auction commences
•
The assignee reserves the right to
bid for the property
Information from Tang Chee
Meng, Henry Butcher Asset
Auctioneers Sdn Bhd.
ADVERTORIAL
By invitation of NCT Group of Companies,
a group of Porsche owners took their cars
on a scenic route up to Genting Highlands
recently. It was on occasion of a Porsche
Carnival at the sales gallery of the new luxury
apartment project called Elemens. Garnering
its name from the fivemain tenets of feng
shui, this is the latest project by NCT Group.
At the event, YapNgan Choy, groupmanaging
director of the integrated construction and
property development firm revealed, “The
take up for Phase 1 of Elemen has reached 85%
and comprises of local and foreign buyers.”
Also in attendance was Joe Yap, group
executive director, who expressed his pleasure
with the way the high-end project has turned
out and is enthusiastic about the company’s
upcoming ventures. The event on Sept 7
attracted 35 Porsche owners and included
not just a drive but games along the way.
For more information on Elemens, visit
DrivingPorsches,
drivingElemen
TIP:
If you are unable to
make it for the auction or
if you are inexperienced,
you can appoint someone
else such as a real estate
agent to bid on your behalf.
You will need to give a letter
of authorisation for this
person to represent you.
Some banks do pay sales
commission to real estate
negotiators who bring their
clients for the auction. In
fact, Danaharta does pay
the real estate agents
commission for their
property auctions where
buyers are introduced
by the agents.
- Milan Doshi, property
and investment guru
AUCTION
INSIGHTS
Going once..
Going twice..
CUT AND KEEP
