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.
Property auction is an event where foreclosed properties are sold to bidders at a price that is much lower than the market rate. Property auction is fast gaining popularity among investors in Malaysia.
To facilitate the auction, auction houses will manage the auction events and assist the direct transactions between buyers and sellers.
In Malaysia, the supply of foreclosed properties comes from the Loan Agreement Cum Assignment (LACA) auction. A LACA property auction is conducted by banks for properties without an individual / strata title while a Non-LACA property auction is conducted by the High Court for properties with an individual / strata title.
It is crucial to find out whether the property that is going under the hammer is a LACA or non-LACA property because the bidding procedures are different.