Auction sessions – held once every month – have been fairly well-attended, especially when certain properties becoming available, including those in prime locations such as Sentosa, near Orchard Road/Tanglin districts, in the city fringe or in Good Class Bungalow areas.
Colliers International sold several such properties in May: a three-bedroom unit at Botanic Gardens Mansion went for SGD2.65 million; a one-bedder at Spottiswoode 18 was sold for SGD850,000; and a three-bedroom apartment at Tanglin View fetched SGD1.55 million.
Some investors attend auctions in the hope of buying a property for a song or to soak in the excitement – many of them would be disappointed. Property auctions in Singapore tend to be fairly placid affairs without too much fanfare or frenzied bidding, but there are good value deals to be had.
WHY SELL VIA AN AUCTION?
Typically, a property is put up for auction in the form of a mortgagee’s sale – when the unit is offered for sale by a bank after the owner defaults on home loan payments – or when the owner has chosen to sell in that manner. Companies may also opt to sell via auction when they divest their property assets.
It is an efficient and transparent method of sale, offering the vendor the opportunity to achieve optimal pricing for the property within a set time frame. While it is a relatively straightforward sale process, auctioneering is a highly-specialised field, requiring keen judgement and a deep understanding of the market.
A skilled auctioneer will be able to analyse real estate trends and provide strategic advice on the reserve price of the property and how it can be marketed effectively. Working with a team, the auctioneer also assists bidders on auction floor procedures and contract signing.
Bargain hunters often think that they can snag a property at rock-bottom prices at auctions. That is not always the case.
The vendors are usually guided by the open market value for the properties, and will not sell them on the cheap. It goes without saying that all sellers hope to garner the maximum possible selling price for their property guided by the valuation of their asset.
However, some sellers may be more open to giving discounts in the following scenarios: a) they have been unable to find a buyer for their property at their targeted price for months; b) if the seller needed to divest the property urgently; or c) the condition of the property will require the prospective buyer to invest substantially on renovation works.
GUIDE TO BUYING A PROPERTY VIA AUCTION:
- Contact the agent to view the property before the auction
- Seek legal advice and check if you are eligible to purchase the property
- Consult your banker on loan financing, if required
- Check if there are changes to the conditions of sale before auction begins
- Do not leave the auction room once the session starts as you may miss out on the desired property.
- Raise your hand to indicate your interest in bidding for the property
- If the bid is successful, you should inform your banker and lawyer so that they can follow up on relevant processes related with the transaction
- The buyer has to pay a 5 or 10% deposit on the successful bid price and sign the sales and purchase agreement immediately. The rest of the payment will be made upon deal completion.
Download Colliers’ guide to auction here