Step-By-step To Buy Auction Property

For most of the home buyers, especially first-time home buyers, sticking to the budget plan are very crucial. But, home buyers usually forget that the asking price of their dream house comes with additional costs such as mortgage payments, property taxes, maintenance costs and even optional projects such as renovations and landscaping.

Due to these factors, first-time home buyers need to do a comprehensive research before buying their dream property. They also need to consider a variety of home acquisition methods to see which one best fits their budget and goals.

One method that can be considered by the first-time home buyer is through auction property as the properties sold by this way are usually below the market price. This can be a good platform for the first-time home buyer to stick to their budget plan.  

Below are 7 step-by-step for you to own an auction property.

1. Identify The Auction Property

Identify the desired property and find the relevant information as per your preferred location and within your budget. You also need to conduct an external inspection of the said property to understand the condition. If possible, do an internal inspection.

You also can get any additional information about the property by calling the auctioneer or agent.

 2. Independent Research About The Auction Property

Make some general enquiries with the relevant Land Office, developer, or management office. Also, seek some independent legal advice on the property. A common problem is evicting occupants from the property, so be prepared to spend time and effort on this.

 3. Preparation For The Auction

         

Take note of the auction time, date and venue. Prepare a bank draft for the required deposit (either 5% or 10%) of the Reserved Price. 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. The sum must be paid immediately after the auction.

You also need to register your details prior to the auction. You may also register on an actual day before the auction. You have to get a copy of the Proclamation of Sale (POS) and Condition of Sale (COS). Make sure you understand all the terms and conditions.

 4. During The Bidding

The auctioneer will announce the commencement of the auction, and then provide a briefing on 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 to indicate the bidding price. 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 the hammer, the property is sold.

 5. Signing The Contract

If you become the successful bidder, you are 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 to 120 days. Contact the bank to arrange for financing.

 6. Legal Matters     

Once you officially own the property, you can apply for a distress order on the occupants through a lawyer before you get a court order. It takes about three to four weeks to process a distress order, which costs around RM1,500-RM2,000.

 7. 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.

Interestingly, if you joining any bidding process from e-Lelong Portal by the Chief Registrar’s Office (CRO) of the Federal Court of Malaysia, you can receive your deposit returned via Pos Laju services or at the counter of e-Lelong Operation Centre.