First and foremost, there are numerous of below market value property when it comes to auction properties. So, what is the buss about the auctioned property? The main reason is that most buyers are warier, instead of buying in the second or third auction, many prefer to wait for the fourth auction before diving in patiently.
With every auction that has properties left unsold, the price will be going down by another 15 per cent, and that is definitely would be more than just an attractive deal for every property buyer.
Nevertheless, it would be best if you still were careful of the potential pitfalls from buying lelong property. While the attractive price point could be a great benefit, but these benefits often come with huge risks too. Here is the compiled list of what to watch out when you are playing on the auction lane.
1. The Wrong One
Well, sometimes you can be blinded or tempted by the massive discount from the sale of the property. A property that in a non-strategic location, outdated design and regular market pricing might look unattractive – until it is 30 to 40 per cent cheaper.
You need to practice the same due diligence for the auction property in Malaysia just as how you would buy a new property or even the one from the secondary market. Purchasing the wrong property just because it is on huge discount is akin to buying a winter coat for Malaysian weather, but you are never going to use it!
2. Research Before Buying the Property
As you probably will not able to view the actual unit, it may not be possible to ascertain the repair works needed fully. However, before the date of the auction, pay a visit to the unit and look at in-and-out as it will give you a rough idea of the property’s condition.
You can check out the surrounding of the property or do some survey with the neighbour. It might not be easy to pinpoint the estimated number, but it is enough to say if you get lelong property, the repair work will be worth your dime.
3. Losing Your Deposit
Next, it is crucial to make sure that you have sufficient cash on hand to pay the balance of the purchase price. You wouldn’t be able to walk away from the transaction, even if you are unable to get an approval of bank loan and caused your deposit to be forfeited.
Basically, there are two types of the auction for foreclosed properties in Malaysia, such as Loan Agreement Cum Assignment (LACA) auction and non-LACA auction. The bank commonly does these auctions.
4. Beware of Unwanted Tenants
When you are purchasing a new property or one from the secondary market, you will get keys to an unoccupied unit. Unfortunately, it does not come with vacant possession for the auction property.
It is possible to get the occupant to move out, but according to the Malaysian law, you must first be the owner of the property to evict the occupants out of the property legally. You also can cover lawfully and apply to move the occupant out through the lawyer first and under the court order.
5. Prepare to Outstanding Foot Bills
Some of the below market value property buyers may get a shock to discover outstanding bills for the electricity, water, maintenance, quit from renting and even assessment that has not been settled previously.
Typically, the bank will help you to cover these outstanding bills, but this is not a guarantee. The cost could be up to thousands and thousands of ringgits. Thus, it is advisable to do a check with relevant utility offices and property management before the auction date.