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Friday, December 9, 2022

Things to take note if you are bidding for an auction house

Social NewsThings to take note if you are bidding for an auction house

Earlier, we reported that auction houses are becoming more popular among young Malaysians due to the cheaper pricing. If you are interested in buying one, here’s some advice from an industry expert on things you need to take note of.

According to Real estate lawyer Nurin Nabilah Un, while auction houses are indeed 30% to 50% cheaper than the market, some come with hidden costs that bidders need to pay if they are not careful.

Speaking to Sinar Harian, Nurin pointed out that apart from the condition of the house, it is important that bidders need to have the financing before starting the bid.

“There are cases of bidders who suffer huge losses when they have to pay additional costs after successfully bidding on a house.”

“Many people think that if they successfully make a bid for a house of RM200,000, then they only have to pay that amount.”

“That’s a common mistake made by bidders. For that reason, people are advised to do research or get legal advice first,” she was quoted as saying.

Source: Malay Mail

Physical inspection

Meanwhile, Nurin also advised bidders to look at the house they wanted to bid on by doing a physical inspection to ensure that the cost of repairs was not too high that it exceeded the market price of the house.

“If the price of the auction house is 50% less than the market price, there is likely damage that will cost more to repair.”

“In addition, bidders also need to check the house’s market price by searching various sources such as online real estate buying and selling platforms or consulting a real estate agent to find out the market price of a house in the area,” she said.

Financing

Nurin then pointed out that a majority of bidders who wanted to buy an auction house did not check the loan eligibility at the bank before bidding.

“When failing to get a loan for a house bid within 90 to 120 days depending on the property type, the deposit issued will be lost.”

“If the house costs RM300,000 and the 10% deposit that needs to be paid in advance is RM30,000.”

“Instead of buying a cheap house, they continue to lose tens of thousands of ringgit because they failed to get a financial loan from any financial institution,” she said.

Legal costs

Apart from that, Nurin said bidders need to provide money for legal costs too, which is 1% in addition to the home insurance which is the primary condition for buying a house.

“In addition, high arrears that have to be borne by bidders is also a common occurrence. There may be no problem with electricity, water and Indah Water bills since the buyer only needs to provide a deposit to open a new account.”

“However, usually bidders will be surprised by the backlog of maintenance costs that can reach thousands of ringgit.”

“In this case, the cost has to be paid by the successful bidder and not the old owner of the house,” she said.

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