7 questions about property auctions

Real estate auctions in Singapore have made news headlines in recent months as many sellers look for alternative ways to dispose their property while buyers look for good deals at low prices. We posed some questions to Sharon Lee, Director & Head, Auction, Knight Frank to get more information and advice about the auction process.

1. Where are property auctions held in Singapore and how often do they take place?

Property auctions here are always held at Amara Hotel in Tanjong Pagar and occur every month. The next auction by Knight Frank is taking place this afternoon, 28 April, at 2.30pm.

2. Where can I obtain information about auction sales dates and the properties available for sale?

Two weeks or thereabout before the actual auction, the property listings are webcasted and advertisements are taken out in national newspapers. Email blasts are also sent to subscribers about the upcoming event. To receive updates, email to auc@sg.knightfrank.com or like their Facebook page at: www.facebook.com/auction.knightfrank

3. How do I go about attending an auction?

Auctions are open to the public and interested buyers need not pre-register. But real estate agents must pre-register that they are representing a client during the auction.

4. What advice do you have for a first-time auction buyer?

For first-timers, they should inspect the unit first and ask for conditions of sale. They can contact Knight Frank to arrange a property viewing by appointment. Buyers must also check their loan eligibility with their banker to know how much is their maximum bid. As auctions require a 10 percent down payment upfront, you must check financial capability because once the hammer is knocked down the sale is complete and the 10 percent of the bid price must be paid and contract will be signed immediately at auction.

5. What is the auction process here like? For instance in Australia the auctioneer is provided with a reserve price. If the bidding does not reach the reserve price, the property will not sell. Is this also the case in Singapore, and if so, will the auctioneer reveal the reserve price?

In Singapore, a reserve price is treated as confidential. Knight Frank guides prospects by giving them a guide price for the property they are interested in but buyers are encouraged to get an independent valuation. A property will be withdrawn from an auction if the bid doesnt meet reserve price. After auction, the property may be sold by private treaty if the offer price is acceptable by the bank/owners.

6. Mortgagee sales at auctions are on the rise. Why is this so?

Basically, a re-possessed unit by a bank (more popularly known as mortgagee sale) is rooted from default payments made by a borrower. Usually the bank will allow the owner to sell at their own capacity within a certain time frame. In this current market, it may be difficult to do so due to the cooling measures and the expectations of owners.

7. For properties put up for auction by banks, how much of a discount can buyers get? Is it the case for banks to entertain a 20 percent discount since their main focus is to recover the principal loan which is normally 80 percent of the value of the property?

At this time, an Open Market Value of a property is a guide price used by banks or any seller for that matter. Auction offers full transparency of the sale.

Romesh Navaratnarajah, Singapore Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg

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