Auctions – An Alternative Route to Purchase Property
It is no big secret that real estate is the best investment anyone could make and my guess is that it will be the same for a long, long time, if not forever. One can survive an early retirement in luxury if one has invested in the right kind of property, as it pays a monthly rent to the owner, because of which they can survive in peace.
There are also those few people who have not worked a single day in their lives because they inherited real estate which pays their bills.
A lot is taken care of with the right real estate property. But the question for those of us who can afford premium real estate is – what to buy along with the best way to buy it. While the obvious answer to this question is seeking advice and expertise of a real estate agent, which of course is one way to go about it, the other, newer way that is gaining popularity today in the Singapore market is through auctions.
As buyers become more price-sensitive and sellers face bigger challenges like dampening demand due to moderating prices and cooling measures, property auction enquiries and sales have shot up over the last couple of years, especially in the high value residential and retail property space. However, the number of mortgagee sales has risen sharply in contrast to mortgagor sales despite the latter constituted the majority of auction sales in the property market.
Knight Frank, along with several Singapore property market experts, identified the implementation of TDSR in mid 2013 as one of the key factors that led to the rise in popularity of property auctions because of its adverse effect on the already sluggish resale market. Due to this increased inactivity, many owners who felt that they were forced into a corner chose to opt for the auction route to indicate their serious intention to sell.
The growing dominance of owners’ sale in auction is a testimony to the changing public perception of auction from one that was largely associated with the sale of distressed properties and hence shunned by property owners, to one that is increasingly favored even by the owners of high value properties.
Not only are the Singaporeans participating in this recent trend of acquiring property but people from the neighboring countries like Malaysia, Indonesia, Hong Kong, India, and even China, have been participating to buy premium real estate in Singapore.
Before You Board the Property Auction Train
Thus, if you are someone who wants to ride the wave and buy premium property through auctions, here are a few things to keep in mind:
- You must always do a thorough check on the property before the auction day. You could do that by arranging a meeting with the person in-charge of the auction and learn everything you need to know about the property, like, the maintenance it needs, etc. Only then should you proceed with becoming a part of the auction.
- The legal documents of the property are always available before the auction; hence, you must seek legal advice regarding it to prevent any legal problems later. It is always advisable to sit for a legally sound auction.
- Once the property is being knocked down to you, you will have to prepare a deposit of 10% of the purchase price and sign the sales and purchase agreement, which is a legal binding document to complete the sale and pay up the balance of 90% upon the completion, which is usually 10 weeks later.
Bank cheques (two in case of GST), your identification card, and/or Power of Attorney (POA), are some of the essential documents for verification that you will need to process the application. It would be easier for you if you had all of these things ready before hand.
- Do not leave the auction room while the bidding is on because it doesn’t take long for the competition to reach fever pitch and the property to be sold.
- Make sure you get the auctioneers attention by raising your hand, or anything else that you want to do while bidding.
- As soon as the property has gone down the hammer, the contract will be drawn up. You only need to furnish the auction staff with your identification card, pay the 10% deposit and you will promptly receive a memorandum of sale the same day.
- If everything has gone smooth till here, then pop a bottle of champagne open and prepare to throw your family and friends a housewarming party, because you are now the proud owner of the property in question.
Thus, auctioning is not something that is looked down upon anymore. You could get premium real estate at auctions but whatever you do, have proper information about it because the best decisions are the fully informed ones.