How to buy an auction property in Malaysia
If you would like to widen your property search, an auction is another marketplace for home buyers. A bank may sell a property it has repossessed via auction because the borrower cannot pay his mortgage. The bank auction method is fast, neat and transparent way to acquire property at 20 to 30% less from the market value.
House for auction by bank
As real estate agents usually earn around 1% commission of your successful bidding price, you may save money by taking things in your own hands. If you are interested in taking this route, here are 10 simple steps as a guide on how to make a bid for your dream house.
1. Identify
Identify your desired property and take note of relevant information according to your preferred location and budget.
2. Inspection
Understand the state and condition of the desired property. Usually you may not enter the property to view the interior but you should conduct an external inspection of the property to ascertain the condition.
3. Independent research
Conduct a thorough research with the relevant Land Office and make general enquiries with the developer or management office. You can also contact the auctioneer or the bank to get additional information about the property.
4. Registration
Register your details prior to the auction. You may also register on the actual day itself before the auction. You have to get a copy of the Proclamation of Sale (POS) and Condition of Sale (COS).
5. Preparation
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. Also, prepare additional cash on the auction day to top up the difference on the deposit sum between the successful bidding price and the reserved price.
6. Auction day
Ensure that you reach the auction venue early and register at the auctioneer’s registration counter. If you are unable to attend the auction, fret not. You can authorise anyone who is above 18 years old to bid on your behalf. However, remember that he or she must bring along the original authorisation letter together with a photocopy of your identification card and bank draft to the auction.
7. Bidding time
The auctioneer will announce the commencement of the auction, and then provide a briefing of the bidding process. He will then read out the important clauses in the COS and the property information. After the auctioneer announces the starting price, the bidder should raise his/her bidding card to signify interest and also to indicate the bidding price.
8. Successful bidder
The bidding process will stop when the highest price is called out three times by the auctioneer and no further bids can be made. At the fall of hammer, the property is sold.
9. Signing the contract
The successful bidder is required to sign the Contract of Sale and pay the remaining difference on the same day itself if there’s an increment to the successful bidding price. The balance of the purchase price must be paid within 90 days from the auction day.
10. For unsuccessful bidding
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.
