Archive | Auction Property FAQ RSS feed for this section

Buyer Guides

3 Jun

Documents Required for Auction

What do you need to prepare/bring on Auction Day?

For Individual Buyers:

  1. A bank draft/cashier’s order equivalent to 5% or 10% of the fixed reserve price payable to respective bank, as stated in POS*
  2. Identification card (I/C) together with a photocopy of I/C (both sides)
  3. An authorisation/nomination letter (if you are bidding for someone’s behalf)
  4. Additional funds to pay difference between reserve price and successful bid price. (5% or 10% of the successful/additional bid price)

For Corporate buyers:

  1. Company M&A (Certified true copy by Company Secretary)
  2. Form 24 (Certified true copy by Company Secretary)
  3. Form 49 (Certified true copy by Company Secretary)
  4. Letter of authorization (with Letterhead and Company Stamp, signed by at least 1 Director)
  5. Photocopy I/C of Directors
  6. Identification card (I/C) together with photocopies of I/C (both sides) of person being authorised to bid for identification and registration purposes
  7. A bank draft/cashier’s order equivalent to 5% or 10% of the fixed reserve price in favour of respective bank
  8. Additional funds to pay the difference between the deposit paid upon registration. (5% or 10% of the successful/additional bid price)

Note: A person who has not reached the age of 18 (minor) or Bankrupt shall not be permitted to participate for the auction bidding.

* POS Proclamation of Sale
* COS Conditions of Sale

What to note at the auction:-

  • Always check the specific amount requested and the Bank Drafts/Banker’s Cheque are correctly payable.
  • Unprepared and inattentiveness during call bids will make you lose a probable opportunity.
  • Certainly do not bring personal or company cheques as Auction deposits.
  • To be present earlier to avoid disappointment.
  • It is important to listen to the auction proceeding very carefully to avoid unawareness.
  • Observe the details provided are correct in the Contract of Sale before endorsement.

What should I know before coming to auction?

1.         Obtain the Proclamation, condition and terms of sale from the auctioneer.

2.         Read and fully understand all the terms and conditions of sale.

3.         conduct an official search on the parent title at the land office and/or other relevant authorities

4.         inspect the property

5.         verify pertinent particulars of the documents

6.         verify the postal address of property with developer

7.         check on the issuance of separate individual title with developer

8.         seek legal advice on the terms and conditions of sale herein

9.         make necessary enquires with the relevant authorities and the developer on the terms and conditions of the consent to the sale herein

10.       the property is sold on ‘as is where is’ basis

11.       Illustration in the advertisement or brochure of forthcoming sales is primarily for information and guidance on intending purchaser/s only.

Advertisements

General Auction Day Procedures

25 Apr

How to bid

You will need to be above 18 years of age to register and become eligible to bid at an auction. Complete and return to the auctioneer the Auction Registration Form together with a cashier’s Order or Bank Draft equivalent to 10% of the reserve price of the property that you intend to bid, prior to the Auction Sale.

In the interest of all parties concerned, the Cashier’s order or bank draft shall be made payable in accordance with the Terms and Conditions of Sale.

General Auction Day procedures

Pre-Registered Bidders

As pre-registered bidders you will check in at the Pre-registered Bidders area prior to the Auction. You will receive your assigned Bidder Number and Terms and Conditions of Sale. If you are planning to purchase more than one property, you must present separate Cashier’s Order or Bank Draft for each property you wish to purchase.

Auction Day Registration

Those who register on Auction Day will be required to complete the Auction Registration Form and deposit with the Auctioneer the relevant Cashier’s Order or Bank Draft amount to 10% of the reserve price for each property that they wish to purchase. Intended Bidders should plan to arrive at least thirty (30) minutes prior to the Auction Sale in order to complete the registration process.

Auctioneer Announcements

Announcements made by auctioneer on the auction day shall take precedence over all prior written or oral term and conditions provided by the auctioneer. Each seller or auctioneer reserves the right to withdraw, alter, add, delete or rearrange the auction inventory or any property, or modify the terms and conditions of sale, reject any and all bids, or advance or accept a bidder. The auctioneer is the sole person who can recognize a bidder as a successful bidder. In the event of any dispute between bidders, the auctioneer reserves the right to make the sole and final decision either to accept the final bid or to re offer the property in dispute at the auction. The auctioneer and the seller reserves the right to withdraw any property at or prior to the auction and sell the property to the Auctioneer.

Bidding Procedure

At the conclusion of the announcement and question period, the auctioneer will solicit bids for the property. Bids are generally made either orally, raising of a hand or raising of a paddle. By bidding you will acknowledge the acceptance of terms and condition of sale whether present during the actual announcement or not. Bidding increments are made in amounts to be determine by the auctioneer, who may set a minimum bid at an auction. The Terms and Conditions of Sale and order of the bidding will be announced prior to the Auction. As a successful bidder, you must sign a Bid Confirmation Sheet immediately upon acceptance of your highest bid. An Auction escort will then usher you to the contract area where you will complete the sale contract.

Writing The Sales Contract

In the contract area on Auction Day you will sign the sale contract and make an earnest money deposit of 10% of your successful bid price, but in no event less than the amount of your Cashier’s Order or Bank Draft, for each property you purchase. Your Cashier’s Order or Bank Draft shall be deposited as a portion of your earnest money deposit. The balance of the earnest money deposit may be by cash or personal check. The sales contract will be a binding contract of sale.

Financing

It is the purchaser’s responsibility to obtain the necessary financing. If you plan to use a mortgage to purchase the property, we recommend that you apply for the loan immediately. If the bank must take longer than the specified time to complete the loan, the seller may extend settlement for a short period of time if you can provide proof of a loan commitment. If you do not obtain the financing within the specified time for settlement you will be in default of your contract for sale.

Published Reserve Price

The properties are offered with a Published Reserve Price. This means that when the bidding reaches or exceeds the amount of the Published Reserve Price, the Seller is committed to sell the Property to the highest bidder. Should the bidding fail to reach the amount of the Published Reserve Price, then the Seller reserves the right to accept, counter or reject the highest bid.

Unpublished Reserve Price

Some auctions are conducted without a published Reserve Price. The “Unpublished Reserve Price” is the confidential minimum price agreed to between the seller and the auctioneer. If the bidding at the auction fails to reach the Unpublished Reserve Price, the property is returned to the seller. To protect the seller’s interests, the said reserve is kept confidential by the auctioneer.

Paddle

An implement given to each bidder at the registration desk. The paddle contains the number assigned to the bidder when the bidder registers for an auction. When you want to place a bid, you simply raise your paddle until the auctioneer acknowledges you. If you are successful, you number is recorded alongside you bid. To pay for your purchase, you need to bring your paddle along to the purchaser payment counter.

Hammer Price

The final bid made before the hammer falls and closes the sale of an Auction. The hammer price is the final purchase price.

Real Estate Auctions Guide

21 Apr

What is Real Estate Auction?

A real estate auction is a method of buying real estate which accelerates the purchasing process through the medium of an auctioneer.

What are the benefits of a real estate auction?

The real estate auction is definitely a win-win situation for everyone involved. The seller disposes of properties quickly and efficiently, thereby saving long term holding costs such as interest and maintenance. For the buyer this can mean a smart investment, since properties are usually purchased at fair market value through competitive bidding, because the auction sale is conducted in an open forum, both motivated buyers and sellers have assurance of watching the property’s true market value emerge as the bidding process progresses. For buyer, fair market value for the property prevails.

Are all properties suitable for auction?

Most properties, but certainly not all, are saleable by auction. Residential property (including single and double story houses, bungalow, town house, country homes and condominiums), commercial property, vacant land can be sold at auctions. The majority of sound developments that can be marketed effectively do extremely well at an auction.

Can I be sure of getting a fair price?

The only genuine measure of value of real estate is what someone else is willing to pay for it. An appraisal is merely an informed opinion. It is not an offer to buy. The real measure of value of real estate, at any given time, is what it will fetch in monetary terms under competitive bidding from informed and motivated buyers.

Don’t real estate auction depress home values?

Not at all, real estate auctions reveal the true market value of a property because auctions are conducted in an open forum where all bids are known, and participants are given immediate feedback on the property value. At an auction, the open market value settles at the level the market can bear, neither elevated nor deflated.

Real estate auctions are often thought of as a “cheap sale” for someone who cannot meet their mortgage payment. Is this true?

Although most other forms of auction, like art auctions, have a very positive image, real estate auctions, have at times suffered from a poor one. Auctions today don’t result from individuals’ repossessed properties, but rather from a smart seller, who chooses the cost effective, accelerated method of selling a property rather than laboring for months or years to sell the property. This accelerated sale allows the seller to eliminate virtually all long-term holding costs. These cost saving are passed along directly to the purchaser. It is truly a win-win situation. Property owner can move on with their lives and buyers can purchase quality properties at fair market value.

What factors determine the success at an auction?

  • The desirability of the property being sold. This includes location, condition and surrounding properties.
  • An aggressive marketing and advertising plan.
  • Realistic expectation on the part of the seller.
  • Conducting the auction in a professional manner.
  • Undertaking due diligence beforehand so buyers are knowledgeable. The only issue that remains is price.

How are properties advertised for auction?

This varies greatly depending on the type and value of the property being sold. Each auction has its own promotion and advertising strategy. Auction marketing is an intensive effort and well-timed plan to create massive interest in the properties available for sale. The various forms of advertising are distribution of Proclamation of Sale or brochure mailed directly to prospective purchasers and posted in public places, newspaper advertising in local and possibly regional or national papers, ads in trade journals and magazines, ration ads, signs posted on the property, television ads and phone solicitation. A qualified and experienced auction company knows which form of advertising are best for a particular type of auction and its location and will facilitate everything from preparing the advertisements to placing them in desired forms. The aggressive advertising hits large groups of buyers that will come and competitively bid for the property thereby yielding true fair market value.

What terms does a property sell at auction and who sets the terms?

The seller sets the terms with the advice of the auction company. Usual terms are that the successful bidder deposits earnest money (either a percentage of the purchase price or stated set amount) and enters into a purchase contract immediately following the auction. The balance of the purchase price shall be paid within 90 days from the date of auction sale. Properties are generally sold on an ” as is where is” basis with no warranties expressed or implied.

What happens to earnest money if a buyer decides at a later date not to buy the property?

Many of the same things happen in an auction situation as in any other real estate transaction. The earnest money deposit is forfeited if the highest bidder is unable to complete the sale regardless of the reasons. If the seller fails to close because of defective title, etc. the buyer’s deposit will be fully refunded immediately.

How much does an auction cost?

Auctioneers, like other real estate brokers, charge a commission as a percentage of the sale price. The commission is negotiable. In additional, the out-of-pocket expenses relating to the marketing and promotion as well as the conduct of the auction are paid by the seller.

What are the advantages to the seller in an auction situation?

Buyers come prepared to buy. “Lookers” are eliminated because most often bidders must qualify by depositing a bank draft or cashier”s order. Sellers get maximum exposure for their property. The auction marketing strategy differs form the conventional advertising. It is more concentrated, therefore more intense and visible. High holding cost are avoided. Through auctions, the seller is in control and knows, that if the property is priced, his property will sell on a certain date from the auction listing. By selling quickly,the seller is able to avoid high holding costs and is also able to benefit from the use of the monies to reinvest in other opportunities elsewhere.

What are advantages to the buyer in an auction situation?

The buyer knows the seller is fully committed to sell. Auction agreements obligate the seller to transfer title to the highest bidder in an auction. The buyer knows he is getting the property at fair market price. The buyer feels comfortable with the purchase knowing that other would have been willing to pay for about the same amount for the property as his bid. The buyer sees many offerings in the same place at the same time. He is able to make market comparisons quickly and easily.

Fair market value

A term used frequently by appraisers referring to their judgment and opinion about the sale price. As the auction process is open to all bidders, a sale at an auction is considered to be a measure as fair market value.