Buying auction or foreclosed property is regarded as a way where people can create wealth according to some famous authors. But buying an auction property is by no mean easy, there are many things one should look into when buying an auction property. Normally a notice for an auction sale (Proclamation of Sale) is advertised in the local newspaper two weeks prior to the actual auction date and buyers are to do the necessary inspection before going to the actual auction. Most of the bidder will find it difficult or no way for them to inspect the property as it is locked and this make inspection rather difficult unless the buyer want to enter the property in an unauthorized manner. Another possible case is that the owner is still occupying the property and inspection under this circumstances is rather impossible as normally owner would not welcome bidder to enter their property knowing well that if a successful auction occur, they will have to move and empty the property.

Bidders are also advised to do the necessary search at local land office to confirm the rightful owner of the property. To qualify for the auction, the bidder are required to prepare a bank draft or banker’s cheque equivalent to 10 percent of the reserved auction price. During the actual auction day, if the property is priced at a very attractive figure, prospective may have to fight with others by bidding for a higher figure where quick decision are required at the auction hall.

If there is no bidder on that faithful auction day, then the property will be auction again with a cheaper price, normally 10 percent below the previous auction price. In this case, you may want to wait for the next auction but bear in mind lower price may attract more bidders.

Successful bidder will be given 90 to 120 days to settle the balance of purchase price. Sometime for a property to reach a stage of it being auctioned, there may be many outstanding bills like assessment, quit rent, maintenance charges or utilities bills that have yet to be settled. Apportioning those outstanding payment between yourself and the financial institution that called for the property to be auctioned may take some time. This coupled with some other red tape may make release of payment from your financing bank rather slow and make 120 days seem like a very short time. So it would be easier if prospective buyer has some kind of financing ready like having some other property to charge to the bank for ready financing in which case the purchaser would be able to purchase with cash obtained from the other financing taking the burden off the purchaser to obtain financing using the auction property itself within the very short time frame of 120 days.

Another element that the bidder should take note of is that if the bidder is buying the property for trading purposes with the intention to resell it to third party for profit, then the bidder should take note that the transfer of the auction property cannot be transferred to the third party directly. The auction property must be transferred to the name of bidder first by the court or land office before the bidder who is now the new owner can transfer the property to whoever that buy the property from him which mean that bidder who bid on the auction property for trading should take into account for the government stamp duty and legal fees involved in transferring the property into his name first.

The transferring process may take long time therefore if the bidder of the auction property resell it to third party, he will probably have to wait for the property completed transferred before the deal with third party can be eventually materialized. Because the long period of time involved in the property ownership transfer, interest and financing charges have to be taken into account. Otherwise the person who trade the auction property may find that trading auction property is not as profitable as he initially thought. As there are difficulties involved in inspection of the auction properties as mentioned above, prospective bidder who want to bid the property for whatever purposes has to allow for repair cost as sometime the exact condition of the property may not be ascertained.

Prospective bidder should also check whether there is a caveat on the property as removal of caveat may require extra legal process and time consuming, therefore it incur cost and likely to go beyond the granted completion date. If the original owner is occupying the property, there could be a case whereby the owner may refuse to vacate the property when the bidder has successfully bought the property in which case, legal process may be required to evict the occupier and again, the extra cost incur and time consuming.

It is because of the uncertainty and hassle involved in buying the auction properties that make the general public reluctant to even try, therefore sometime even when the property is priced very attractive, there may be not many or no taker. However for those who are daring, with strong heart and financially sound, the auction may just present an irresistible opportunity for fantastic return on investment especially property in prime location.