Auction homes are being transacted close to their opening prices, either at auctions or after the auction.
While sales of distressed homes (homes sold by sellers who are under financial distress) may be moving at a slow pace, some are being transacted close to opening prices, either at auctions or via negotiation following the auction, reported The Business Times (BT).
A mortgagee property at The Ladyhill, for instance, was transacted above its $7.055 opening price after the auction on 7 January, said Knight Frank’s Head of Auction and Sales Sharon Lee.
BT understands the property was transacted at $7.1 million.
At 4,499 sq ft, the property is the biggest penthouse facing greenery at the 55-unit The Ladyhill. The maiden project of SC Global, The Ladyhill is an upscale freehold condominium near the Shangri-La Hotel.
Auctions were put on hold for much of 2020 amid restrictions on gatherings. They only resumed in October 2020 when the government allowed a maximum of 50 people at events.
Banks, which hold the mortgagee properties, would start at the valuation price, before trying to sell at lower prices when no offers are received.
Lee noted that properties may also be sold prior to the auction just like the case in an auction on 21 January, where two homes received offers that were accepted. The offers came in after the pre-auction publicity, said BT.
A landed house in Lorong Pisang Raja changed hands at $3.018 million, up from its guide price of $2.62 million. A Parc Olympia condo was also sold for $635,000, similar to its guide price.
“Sometimes the offer is very good, (and the bank) doesn’t want to waste it; in some cases, the offer could be above valuation,” said Lee as quoted by BT.
She revealed that a three-bedroom unit at City Square Residences saw lively bidding at a February auction, receiving 17 bids. It was sold for $1.86 million, which was above its $1.55 million opening price.
BT noted that potential buyers make their rounds at property auctions in hopes of clinching bargains. However, auctioneers say fire sales during auctions are not common, so auctioners will typically try their luck again after an auction with their own offers.
Some 50 people, for instance, turned up at an auction conducted by Edmund Tie last month, but no sale was made as the bids offered did not match the reserve prices.
Edmund Tie Senior Director and Head of Auction and Sales Joy Tan said 14 mortgagee properties were put up during the auction on 24 February, with prices ranging between $200,000 and $8.5 million.
“Currently, four properties are under private treaty negotiation,” she said as quoted by BT.
A private treaty is the ‘normal’ sale process, where buyers and sellers agree on the selling price and negotiate the terms of the contract.
“Most bidders want the ‘lowest price’ if possible and hopefully they can have some bargains via private treaty sale,” said Tan.
“They have the mindset that if no one starts the bid, they hope to bargain down after the property is withdrawn and the deposit will then be only 1% option money and they have two weeks to exercise the option.”
Successful bidders in an auction sale usually put down a 5-10% deposit of the successful bid price and immediately execute the contract, with the terms in the conditions of sales not subject to any alteration, she said.
In January, Tan sold three mortgagee homes after the auction, with the prices close to guide prices.
One of them was a landed house in Andrew Terrace, which was sold for $3.5 million, similar to its guide price.
Tan shared that the buyer for the 3.5-storey corner terrace “initially offered a lower price and during the negotiations, another two interested buyers came in to counter with a higher offer and so it resulted in the property sold at our guide price”.
A two-bedroom condo in Southbank was also sold for $1.46 million, down from its $1.58 million guide price, while an executive condo in Anchorvale Crescent went for $1.092 million, up from its $1.08 million guide price.
“They are selling close to the guide price because the residential market is resilient,” said Tan.
Lee said the residential market is strong since more people are home amid the travel restrictions and have the time to look at properties.
Property prices have been steadily rising; in Q4 2020, private home prices climbed 2.1% quarter-on-quarter, up from 0.8% in the previous quarter.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this story, email: email@example.com