Many investors like to find “good deals” at property auctions.
If you are keen, you can contact the auction department of Colliers, Knight Frank and Jones Lang LaSalle. Ask them to add your name to their auction distribution list.
If you’re eyeing any property in the list, you can call the person-in-charge to ask for more details before attending the auction.
In case you can’t make it there, you can ask one of their staff to bid on behalf of you.
For me, I try to avoid buying properties at auctions because:
1) You have to pay 10% of the purchase price on the spot.
2) If you are the successful bidder, you have to proceed with the purchase under any circumstances.
3) You may attract other bidders and end up paying a lot more than the base price.
Anyway, it’s very difficult to find good deals in auctions during property booms like what we’re experiencing now.
That reminds me of what Lauren Templeton and Scott Phillips said in their book Investing the Templeton Way,
If you can understand the benefit of buying a farm at auction for more cents on the dollar and understand that it is going for cents on the dollar because no one else is there to bid up the price, you get the concept of bargain hunting in the stock market. However, if the courthouse steps are full of bidders shoving each other and screaming bids to higher and higher levels, it is probable that you are not going to get a good bargain.
I prefer to wait till the end of the auction (hoping that nobody has interest in the property), approach the person-in-charge and check whether we can go for a private sale.
If the property has undergone a few rounds of bank auctions and still unable to sell, the property becomes a mortgage sale in the open market.
Since the objective of the bank is to recover the mortgage amount as much as possible, they will be more open to any offer from sincere buyers. That’s when buyers can expect a good bargain.
Usually, these bank sale units are marketed by 2 to 3 property agents.
You can try the following questions to elicit more background information from the marketing agent:
1) What is the last offer rejected by the bank? (to check where you should start with)
2) When did the bank receive the last offer? (to see how desperate the bank wants to sell)
3) How much does the mortgager owe the bank? (to estimate how low the price can go)
I’ve bought one bank sale property using the above methods. Do share with me your experiences.