By PropNex Research and editorial
Most people are familiar with the idea of a property auction, but not many have attended an actual session or seriously consider it as an avenue to acquire a property. Usually, properties – including landed homes, condos, HDB flats, industrial and commercial units – are put on auction either as a mortgagee listing or owner’s sale. Property auctions are usually held once a month by various consultancy firms and real estate agencies, including PropNex.
From there, interested buyers can register with the firms in advance to attend these sessions. Typically, the auction list will be uploaded online a couple of weeks before the auction date and those who are keen on any properties could arrange for viewings before bidding for them at the auction.
In the case of mortgagee listings, also known as foreclosure or bank sales, these properties are made available for auction when the owner of the properties are unable to service the monthly loan repayment, resulting in the unit being offered for sale by the bank.
Usually, home hunters will look at new launches or resale listings when they evaluate and shortlist interested properties. However, auctions should not be overlooked as they can potentially offer some interesting options at decent pricing.
For property owners, they can even opt for auction as a way to sell their property, as it is a relatively efficient manner of sale which enables an opportunity to garner optimal pricing for the unit via open bidding.
Here, we share why you should not overlook a property auction.
1. Good value
Despite the misconception that auction properties may either be sold at rock-bottom, bargain prices or auctioned to a sky-high tag, this is not always the case. At most chances, buyers can always find themselves snagging a good buy.
Typically, the offering price for the property will be announced during the auction session before the auctioneer calls for bids from the participants. Once the final bid is accepted by the seller, the property is knocked down by the auctioneer, signalling a sale.
Depending on how attractive the property is and the demand for the unit, the bidding process can be quite competitive. For instance, it is not unusual to see active bidding for luxury properties in places like Sentosa or in the prime Districts 9 and 10.
But do take note that the bid can also be rejected if it does not meet the seller’s reserve price. If there are no bids or no successful bids, the property will be withdrawn from the auction.
2. Transparent and straightforward process
One of the major advantages of an auction is that it provides a transparent, efficient, and straightforward platform for the selling and buying of properties. As a buyer, the auction enables one to know about competing offers on the spot and decide whether to submit a higher bid.
But similarly, buyers are usually unaware of offers from other interested parties when buying a resale property and thus may not always get the chance to counter offer. For the seller, an auction is a quick and efficient way to sell the property besides providing a chance to optimise the selling price. This is especially when many bidders try to outbid one another for the unit, thereby driving prices higher.
But at the end of the day, know that properties that are not sold via auction are not off the table. Interested buyers could still enquire about them and negotiate to purchase them via private treaty.
3. Market research
Auction attending itself here is considered a due advantage to many buyers or sellers. Attending auctions help improve understanding of the prevailing market conditions, offering a good gauge of buying interest for any given locale as well as buyers’ pricing threshold.
Those who are interested in any of the auction properties should arrange for a viewing of the unit and thoroughly assess its location and condition, recent transactions, and decide how much one is willing to pay for it. Just remember to consider things such as the potential renovation cost and how many times the property has been re-listed for auction when evaluating how much one should bid for the unit.
For example, if a property has been put on auction for a period of time without success, the seller may be more willing to adjust the price. That said, it is always advisable to do the homework and keep abreast of property news and trends ahead of attending auctions.
Getting it right
Lastly, before attending any property auction and bidding for choice units, do check on the following: are you eligible to buy the property (e.g. foreigners are not allowed to buy landed homes on mainland Singapore); have you secured the necessary financing arrangement; and are there any changes to the conditions of sale for the property.
Remember to remain in the auction room once the session begins, watch out for the property when it is being called out and raise your hands to indicate an interest to place a bid. Should the bid be successful, the buyer will have to pay a deposit of 5%-10% on the bid price and enter into a sales and purchase agreement immediately. Hence, it may be a good idea to bring the cheque book along.
It is easy to get caught up in the auction process, so remember to do your sums and ensure that the property meets your financial budget and housing needs or investment objectives. Do not rush into making a purchase, if you need to, speak to the auction team first to evaluate your options.
And alas, if you find yourself stuck in a rut even after weighing all possible options, you may need a professional’s opinion. In this case, schedule a visit with us or book a free consultation with our trusted and renowned representatives.
Lastly, don’t forget to like, subscribe and share our articles with your friends if you think our content is useful to you. And if you would like us write a review for any property projects, have a blast in the comment section below.
