Whether you are purchasing a brand new property from the primary market or existing property from the secondary market, you need to have a clear understanding on your financial capabilities, the unique factors that are not found in other properties before committing to purchase the property you desire. The same principle applies when purchasing an auction property. To guide property investors in making informed decisions, we have outlined the pros and cons of purchasing an auction property.
Advantages:
Bidders have flexibility in determining the purchase price
Unlike purchasing property in the primary and secondary market, interested bidders do not have to undergo price negotiation process since the reserve price of the property is determined by a registered valuer. The only price competition is the bid offered by other bidders. However you merely need to stay one bid ahead of your competitors to be the successful bidder.
Bidders have the chance of owning a property in preferred location at a more affordable price
More often than not, we will tend to eye on a property that is ideal for us but the price of that property is not within our reach. Through auction, potential bidders have fair share of opportunities to bid for their desired property,rather than a first come first served environment which is common with newly launched developments.
Bidders can now bid at the comfort of their own homes
Yes, you heard it right. Property auction in Malaysia has also followed the technological bandwagon of being able to be conducted online. This is a significant change since bidders are no longer limited by distance. Bidders can easily get exposed to many auction deals online and widen their options.
Disadvantages:
Hidden Cost & Problems
While auction property may appear to be cheaper, it may seems to good to be true. Auction properties with low price tag may suggest that it has been auctioned for quite some time, yet there are no bidders willing to take up the property. This could be due to accumulation of outstanding bills by the previous owner such as maintenance fees, quit rent & assessment, water and electricity bills.
Other than that, since you are unable to view the internal condition of the property, it is possible that the property is not well maintained and are inhabitable. Then you would need to fork up a substantial amount of renovation and repair fees. What's even worse is that if there is a private caveat issued to the title of the property, you will need to go through tedious legal procedures just to remove the caveat. Regardless, most of the disadvantages could be eliminated through proper due diligence.
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If you are interested in real estate , please feel free to get in touch with us.
Wesley Tan: +6017-688 9998
Jasone Gan: +6017-6018899
Brandon Lim: +6016-416 9193
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