Beware of Traps When Buying Auctioned Property


There are huge opportunities that we can gain from auctioned property but remember that there are huge traps too. As a general rule, any investment that give an opportunity to make a lots of money also have a high risk of a losing lots of money too.

So, remember that if you want to make money from property auctions, you must know what you are doing. Otherwise, you could lose it all and get a major problem.

First trap – Poor Location

Some of the properties being auctioned off are very cheap. Some properties being auctioned off for less than RM20,000. That is less than the price of some second-hand cars.

However, just because it is cheap it does not mean that you should be buying it. Because the price may be cheap for a long time. So yes, you can buy it cheap, but then no one will be buying it from you until years later.

Second Trap – Occupied Property

You are buying the auctioned property as it is. So if there are people occupying the property, it is your job to get them out. It is very difficult to get the out. They are not in most of the time. Even when they are, they refuse to open the door.

You can get a court order to evict them but that will equal to time, cost and money. Sometimes, they may still not budge even with the court order. So in short, if the property is tenanted, and the people living there are not willing to move out, forget about it – no matter how cheap the property is unless they are willing to pay you good rental.

Third Trap – Outstanding Bills

Outstanding bills are include electric, water, maintenance and even assessment taxes. The cost may run into tens of thousands. So it is important to discover all these before bidding for the property. Otherwise, you could be buying a property and unknowingly have thousands of Ringgit in bills to be settled.

However, this does not mean that you should shy away from a property with outstanding bills entirely. The point to note here is that you must know about them before bidding. That way, you can calculate your costs and figure out if it will be a worthwhile purchase.

Forth Trap – Repair Cost

You must also take repair costs into consideration, and hence include them into your budget. The budget will obviously depend on the condition of the property.

If the property is good, then the budget will be lower. However, if the property is in a poor state, then obviously you will have to set aside a higher figure. And because of the potentially vast difference in cost here, you would do well to inspect the property first. That is the only way to get an accurate costing.

Leave a Comment

  • caroline 16th May, 2010, 12:47 am

    I thought all the auction property are not allowing us to visit before the bidding? They might tell you the address but you can’t go inside the property. If that is the case, how can we know the condition of that property? It can affect the value a lot with different condition…

    • 16th May, 2010, 3:34 pm

      It is better to see the house & talk to the tenant before bidding. Anyway this is the risk of buying auction property.

  • caroline 16th May, 2010, 9:37 pm

    Thanks for the info 🙂

    • mrupai 19th August, 2010, 12:51 am

      All the outstanding bills should be sent to the bank’s lawyer for quick reimbursement.

      Bank always like it if you sent it very much later.

      * provided you can settle all the legal process of acquring the property.

      auction property is not suitable for the non risk takers.

  • Isaac 17th August, 2011, 12:58 pm

    I am interested in buying auction properties for investment.

    I know that if you successfully bid the property, you will have 120 days to settle the loan and stuffs. I am just wondering is that possible to sell the property within these 120 days? This is because I am thinking to sell these auction properties soon after I won the bid. Then I will not need to apply for loan and might be able to make some money. Is this possible?

    Thank you so much and look forward to your reply.

  • mohamad 5th January, 2012, 5:38 pm

    please warn bidders of agents who do not give bidders POS and COS documents and take cash in advance or ask in advance commissions. They also practice bidders negotiations, in which they negotiate under the counter commission not to bid. These agents should be criminalised because they make profit for doing hardly anything, and take the money which should belong to the bank and auctioned property owner.

  • MacClane 1st April, 2015, 2:39 am

    I agree with the second trap. My friend bought a lelong house and the house been occupied by family of gangsters. Its been 6 years now they are still there. Nothing can be done. We asked TNB to cut electric suppply, they threaten to kill him. Even police is not dare to solve this issue.