Property auction is to let potential buyers openly submit bids, with the highest bidder securing the right to purchase the property. Interested buyers call out their bids by themselves or through their representative. Bids can also be submitted via the internet. In the meantime, a licensed real estate company will act as the auctioneer that declares prices and repeats the current highest bid or have it publicly displayed. You might also need to use mortgage calculator to save money on your home loan. Before that, below are things to be considered before buying a house in auction.
1. Check eligibility to purchase
If you are a Singaporean who is seeking to purchase a private residential property, there are generally no eligibility issues, save for any applicable HDB restrictions on owning private property for owners of HDB flats. If you are a foreigner or Singapore Permanent Resident (PR), you are required under the Residential Property Act to seek prior consent from Singapore Land Authority’s Land Dealings (Approval) Unit to buy restricted residential property in Singapore. This refers to landed property such as detached house, semi-detached house, terrace house, and includes cluster housing.
2. View, inspect and research on the property
Upon the release of the list of properties up for auction, the buyer should make arrangements with the auction agents to view the property and conduct research on the property in question.
3. Review the auction documents
The buyer should always read carefully and seek legal advice in reviewing the auction documents to ensure that the buyer fully understands the legal allegations arising from the purchase of a property at the auction.
4. Obtain financing arrangements and approvals
Buyers who require financing loans should make the necessary financing arrangements by obtaining pre-approval for a mortgage loan from the bank, as well as to prepare the deposit. The deposit sum ranges from 5% to 10% of the successful bid price, depending on the terms of the Conditions of Sale, which is to be paid usually by cheque upon a successful bidding or when signing the auction documents.
5. Check for any amendments to the Conditions of Sale
Before the auction commences, the buyer may be given a copy of the Conditions of Sale and asked to sign an acknowledgment that he/she has read and understood the terms set out in the Conditions of Sale. Prior to this, the buyer should check for any amendments to the Conditions of Sale and raise any queries before bidding starts.
6. Key terms buyers should be aware of
A person known as the auctioneer will conduct the auction. The auctioneer will offer each property at a guide price known as the offer or opening price. Each property is subject to a reserve price which is an undisclosed or minimum price which the bid amount must meet or exceed in order for it to successfully go through.
7. If a successful bid is made
After a successful bid, the successful bidder will also have to pay the deposit by cheque. If GST will be charged on the sale, a separate cheque for payment of GST is required. The balance bid price will be payable upon completion of the sale, which is usually within the next 8 to 12 weeks, depending on the terms of the Conditions of Sale. During this period, the buyer’s conveyancing lawyer will coordinate and liaise with the seller’s conveyancing on the necessary documents to be executed. The buyer will also take possession of the property upon completion of the sale and can move into the property any time after that. If the buyer fails to make payment in accordance with the Conditions of Sale or attempts to default the purchase, it will constitute a breach of contract for which the seller is entitled to take legal action or specific performance against the buyer.
8. Where there is no successful bid
If the highest bid does not meet the reserve price, the transaction does not go through and the property will not be sold. However, the option remains open to interested buyers to make offers and negotiate privately after the auction. The property may be sold through private treaty sale if a deal is reached then.