Property auction market is attractive. Help buyers to buy auction properties.

Property auction market is attractive. Help buyers to buy auction properties.

I have not bought any auction properties before. I do think if the price is right, then property auction market is a good hunting place too. Especially for the ones with deep reserves of cash. I have been to countless of property auctions and have seen properties without any bid and properties where the bidding went up to even beyond the market price. Maybe there’s something special, maybe it’s emotion but it’s always interesting to sit inside a room full of bidders, especially for some selected super undervalued properties.

Well, it seems that there is a request for the authorities to do something in order to make the property auction more vibrant and with less dominance of auction syndicates.

Article in nst.com.my. See Kok Loong, executive director of Metro Homes, said houses sold at an auction are solid investments but winning bidders have hard deadlines for payment, which may put off prospective buyers.

Furthermore, there are worries about the dominance of auction syndicates which can  result in an “unfair playing field”.

Metro Homes suggests that banks provide successful bidders with short-term financing options (six to 12 months) to create a more equitable and accessible market.

“This initiative aims to provide immediate financial support for successful bidders, ensuring their ability to complete the purchase and contributing to a more equitable and dynamic real estate market.”

“Therefore, we advise bidders to always have 100 per cent of their funds ready before placing a bid, pay with cash up front, and return to the bank for refinancing.

“By promoting broad participation, this approach challenges the dominance of auction syndicates, making the market more competitive and discouraging unfair practices.” A lot more details here: Article in nst.com.my.

Deep pockets are needed as bank loans may not be on time before the hard deadlines

This is one major reason people do not enter the auction property market. Many of these units may have outstanding bills and it will take time to settle. In other words, the buyer may have to just pay for the property in full first before then refinancing the property later with the bank. Buying a RM500,000 property and having at least RM550,000 in the bank ready for this purpose alone?

So, I think the suggestion of banks providing a short-term financing makes sense too. Just not too sure how this can be easily implemented. More bidders means a broader participation and the final price could be closer to the market price for such auction properties too.

Auction syndicates?

For properties which are very attractively priced, if there’s little or no bidding, then the buyer may be able to buy this property for a lot lower than the market price. Sometimes one is plain lucky but this is not the norm because when a property is attractively priced, many bidders could register and enter the field. These potential bidders just have to be prepared that their loans may be coming quick enough and they need to buy up the property first. Meanwhile, when the number of potential buyers are increased, then it’s harder for any auction syndicate to work.

Let’s see what happens in the near future for the property auction market. These days, major auction houses also dominate the property auction market scene too.

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