PETALING JAYA: Property owners are auctioning their real estate amid a weak secondary market instead of relying on agents, according to auction houses.
The property market is divided into the primary market where people buy from developers, and the secondary or sub-sale market where they buy from owners via agents.
Private auctions are being held to sell residential, commercial properties and land, said one of the largest auction houses in the country Ng Chan Mau & Co Sdn Bhd.
Business development manager Tom Low Chee Hian said private, or owner-appointed auctions, is an avenue that seemed to be growing.
Owners have been turning to private auctions because they were unable to sell their properties, sometimes for years, via a real estate agency.
Licensed auctioneer Leong Wye Hoong from Leong Auctioneer Sdn Bhd said private auctions is “quite a common practice”. It started private auctions four years ago, and has organised between 50 and 60 of them, with a success rate of 20% to 25%.
The secondary market has been slow the last few years with the demand more towards residential units although he had organised private auctions for commercial retail. That market, he said, seemed to be slower than the residential market.
Unlike a bank-related auction resulting from a foreclosure, potential bidders can view the property before the private auction takes place. Vacant possession is from the owner, and not from the bank, said Leong.
Instead of the normal 10% when bidding for a property that is being foreclosed by the bank, a deposit of 2% to 10% is required, according to Leong.
The slow market has resulted in real estate agencies accepting project sales contracts with developers, where they help developers to market their projects instead of concentrating on servicing the secondary market.