As you are looking for your dream home by doing online research, you found out that there is a property located in a matured township being put up for auction, and you are very eager to take action before it was too late. But before that, you should take note on all the necessary due diligence before committing to ensure that you do not end up in the losing end. Here is a step-by-step guide for you take that property home with a smile.
Step #1: Approach the person in-charge and request for information
First of all, you should ask the lawyer or auctioneer about the legal information of the property. If the property to be auctioned is without a individual or strata title, they will provide you a copy of Proclamation of Sale (POS) which contains information such as locality, size, encumbrances of the property and other terms and conditions. You should then carry out a title search to ensure that there is no ambiguity about the information stated in the POS. While you are at it, check for any unpaid quit rent as well.
IMPORTANT!!!
Most POS will contain this clause:
“Intending bidders are advised to inspect the property, seek legal advice, conduct a land search and make enquiries with the developer of the property on the terms of its consent to the sale.”
Step #2: Inspect the property and consider its surrounding and neighborhood
Whenever possible, try to talk to some neighbors and get to know them. Do also take note on the surrounding amenities and accessibility as you would do when purchasing from a developer or sub-sale. For auctioned properties, you are mostly only able to inspect the property externally since the property owner is unlikely to allow you to enter the property. In the case where you are feeling eerie when inspecting that property, trust your gut and do not proceed to bid.
Step #3: Check if there is unpaid bills by the owner
Aside from utility charges such as water, electricity and Indah Water Konsortium (IWK), you should also check if there is any unpaid assessment tax with the local authority. If the property in question is a high rise property, you should find out from the management office whether the owner is owing any service charge, maintenance fee and sinking fund.
Step #4: Research on the recent sales transaction & price trend
The purpose of doing so is to identify the market value of the properties in that area. If the transacted price for the past 2 to 3 years is in the uptrend, this indicates that you have made the right choice to bid for that property. Then, you should proceed to plan on the maximum bidding price that you are comfortable with to prevent you from overstretching yourself. Keep in mind that you should take into account the initial deposit, renovation cost and other outstanding payment, if any.
Note: You can visit www.brickz.my to find out the latest transaction price of a property.
Step #5: Prepare your "bullets"
Last but not least, you should prepare the required deposit in the form of bank draft (5% or 10% of reserve price based on type of auction property). On the actual auction day, arrive at least 1 hour earlier to register yourself as a bidder.
Reminder: If you happen to be the successful bidder, you will be given 90 days to 120 days to settle the remaining purchase price. Therefore, it is better for you to check whether you can qualify for a bank loan before purchasing an auction property. Alternatively, you could pay off the remaining by cash if you are cash rich. Happy bidding!
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