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3 Things You Should Know Before Buying An Auctioned Property

Updated 18 Apr 2022 – By Team Loanstreet


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Auctioned properties can be a lucrative way to acquire an asset under your name. The prices are usually way lower below market values and are a steal. However, nothing comes risk free and you should be aware of the pitfalls that can come upon purchasing an auctioned property. 

Let’s take a look at some of the things involved.
 

1. Be familiar with the process

Who is eligible?

You must be at least 18 years of age to be eligible to bid at a property auction.
 

Steps

  • You may register prior to the auction sale or on the auction day. 

  • You need a cashier’s order or bank draft  equivalent to 5% (Loan Agreement Cum Assignment-LACA) auction or 10% (Non-LACA auction) of the reserve price of the property that you wish to bid for. 

  • You should arrive 30 minutes before an auction if you intend to register on the auction day.

  • After registration you can bid for the property you wish to purchase. Don’t be rash and bid more than the initial limit you have set.

  • The successful bidder will have to sign a Sales Contract and pay the first 5% or 10% of the final bid price, and settle the remaining balance within a certain period of time (common time frame is 3 months).

  • In most cases the amount will be greater than the deposit based on the reserve price, so prepare your cheque book just in case.

     

2. Know what you’re getting into

In every decision-making, there will surely be advantages and consequences, especially when it comes to purchasing property. To evaluate easier, you can refer to the table below: 
 

PROS CONS
Auction Property Value < Market Property Value Outstanding payments: utilities bill, tax and maintenance fees
Quick owning without heisty procedures The property might already been occupied
Valuations are done beforehand Uncertainty when it comes to the house’s condition


 

3. Make use of the tips and tricks

Before joining an auction, here are some tips you can use: 

  • Inspect the subject property (check for the property's external condition or if it is occupied).

  • Ask to view the property interior (or you can ask the neighbours with a similar house layout for a peek).

  • Try to dig up information from the neighbours about the nature of the previous owner.

  • Visit the management office to find out the outstanding maintenance fees.

     

The process might be unfamiliar, but don’t be afraid to take risk



On top of the hidden uncertainties faced, auction property buyers also share the same challenges as any home buyers do like securing a housing loan, lower valuations and higher upfront cost. 

We highly encourage buyers to conduct a thorough research first and judge wisely whether the advantages outweighs the problems. Additionally, gaining and flipping from auctioned properties is usually the game for seasoned property investors and not recommended for first time home buyers so think twice before taking the plunge.

If you’re still hesitant, that’s totally fine. You can still buy a house the old-fashioned way, which is through loans. Checkout if you’re eligible for a house loan with our Home Loan Eligibility Quick Check Calculator here.

 

*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.

 

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