150 units of same development in the same auction. Oh dear or wow, got opportunities?

150 units of same development in the same auction. Oh dear or wow, got opportunities?

What happens when 150 units are in the same auction?

I follow the postings from KL Selangor Lelong Properties in Facebook and I just saw this yesterday. Many weeks back, when I was in Melaka, I stayed at a homestay unit from which I could see this building (in the image). In my mind, I was thinking that this is a very big building and it may take some time for the whole building to be occupied. Even if I am a business, I need to have staying power so that the whole mall have time to build up its visitors number. Now I saw this auction listing.

Buying an auction property with important considerations

Do you know the area well? Would there be sufficient economic activities or population growth within the next few years? Only if you are sure of these two that you go to the next question of buying or not buying.

Is the current auction price at a level which you deem very attractive? Please remember you need to do renovation, if you hold then there is a holding cost and do you have any purpose when you buy this unit other than it’s attractively priced?

Reason is because of the sheer number of units which will mean that one auction or even a few auctions may not be enough to clear all the units. Every subsequent auction will come with a 10 percent discount from the earlier auction price. So this will take some time.

Perhaps a 30 percent discount is safer

I personally think that when it’s an auction property, it’s safer to be safer. 🙂 So, I will aim at a price which is 25-30 percent below market price. The reason is because we are unable to view the interior condition of the unit. Thus, there is a possibility that we may need to spend a considerable sum for the piping, wiring and even other general repairs. For own stay it’s good enough.

Some even say 40 percent but I think 30 percent is still safe enough if we want to buy a potentially undervalued property, fix it up and just stay. If it’s to fix it up and then sell, then the lower the better. As a licensed auctioneer, I have auctioned properties but has never bought an auction property yet. I just feel more comfortable in knowing exactly what I am buying.

Happy deciding and all the best.

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