Going, going, gone! ‘Haunted’ homes are 30 per cent below market price at Hong Kong property auctions
Homebuyers can turn to auctions for good deals, as the value of certain types of real estate is sometimes below market price
Tsang Kit-chun is a veteran auctioneer and managing director of AA Property Auctioneers. He explains what property auctions are all about.
Apart from bank repossessions, what types of properties are usually sold through auctions?
It could be residential, commercial, retail, industrial and anything else, such as rooftops and advertising space. In addition to repossessed properties, there are the so-called “haunted” homes [where unnatural deaths took place]. Normally, agents are reluctant to market haunted homes, so they would usually refer them to us. As a rule of thumb, a haunted home is usually priced 30 per cent below the market price. But how much potential buyers are willing to pay for it varies from one property to another, depending on such things as the number of people found dead in the house, whether or not someone in the house committed suicide or was murdered, and so on. As a result, an auction is the most efficient way of determining the market value of this kind of property.
How do I know when and where a property auction is going to be held?
We advertise through newspapers, our website, emails to clients, and posters in the neighbourhood about where the property to be auctioned is located. We organise two to three auctions a month, depending on the number of listings we have. Interested buyers may learn from our website about the date, time and venue [usually a hotel] of the upcoming property auction and the properties to go under the hammer. We also find posters an effective marketing channel since a lot of homebuyers travel around the district to view properties.
Who are the buyers at auctions? Are they able to get really good deals or heavily discounted properties at an auction?
There are different types of buyers, ranging from well-prepared investors to average homebuyers.
As Hong Kong’s property market is very
transparent and information on most properties can easily be obtained from government departments and public domains, prices marked
for auctions are usually very close to the market price. Some of the properties are sold for about 5 per cent below the market value and are considered a good bargain.
How does one prepare for an auction?
Before you sign up for an auction, read carefully the terms and conditions attached to the listing scheduled provided by the auctioneer, especially if
it is a repossessed or distressed property. Orders issued by the Buildings Department or other
special conditions, such as defects to the title, if any, would also be detailed. Read these carefully and make sure you understand the risks. After studying the relevant terms and conditions, you may want
to view the property. After indicating your interest, you can view and inspect the subject property during a specified time. If you miss the time, you may also schedule a viewing with the agent
handling the case. In much the same way that an estate agent would, we would present title search records and layout plans, among others, and all information we have of the subject property, to interested buyers.
What happens to the buyer if he or she withdraws from the deal after the hammer has fallen?
Before the bidding begins, we clarify the consequences of withdrawing from a bid. Like other real estate deals, the 10 per cent deposit paid by the buyer would be forfeited. Depending on the terms, the seller may further claim compensation from the buyer for the loss he or she may have suffered.