Sunday, May 14, 2006

Penang Property Auction

I attended my first Property Auction at PISA today as a viewer rather than a bidder. It was jointly organized by Bumiputera-Commerce Bank along with Palma Housing and MNP.

Being familiar with how ebay works, the auction terms and proceedings were roughly the same. However, there were lawyers sitting on one side and bankers on the other side. The moment there was a property successfully auctioned out; officials will escort the winner to sign the necessary paperwork.

The highlight of the event was about the hottest property which was a three storey commercial shop house that has 9 bidders registered with the reserve price of RM405,000. According to the chairperson of the auction, properties that have more than two interested bidders will have a start bid price of the reserve price plus one bid increment. Bid increments were set at RM10,000 based on the property price meaning the effective start price will be RM415,000. It created a stir among the interested bidders as previous bid increments were only RM1,000 and one particular bidder was so unsatisfied, he went on to tear the mini brochure that lists all the property up for bids in front of the whole crowd. Eight of the bidders decided to withdraw their bids and one bidder was left which went on to get the property at the reserve price of RM405,000. She was no doubt the smartest investor and got the property at the lowest possible price. I am pretty sure that majority of the bidders that withdraw earlier reacted by emotion or following others. If either one of them stayed firm and decided to proceed with the bidding, he or she would have the possibility of securing the property at a much lower price as well. The lesson I would say is that to always stay firm and never be influenced by emotions or others.

I also learnt that non-bumiputera individuals may not represent a bumiputera in bidding for a bumiputera property. If you are puzzled, there is dual class citizenship in Malaysia. Bumiputera citizens are considered to be original inhabitants of the country where else non-Bumiputera are the opposite. The government has allocated a number of properties and land that can be purchased only by Bumiputeras. This lesson came out when two non-bumiputera bidders were registered to bid for a Bumiputera property.

We went to Equatorial Hotel that evening for buffet dinner to celebrate Mother’s Day. What did you do for Mother’s Day?

Well, I hope you have learnt something from my experience at the auction.

Take care,

Benny Ong

2 comments:

anna geok choo lee said...

Dear Benny,
your day at the auction was very interesting.
I was born in malaysia but surrendered my passport for a british one when i worked in england as a nurse. Now iwant to return to penang. How would you recommend buying a property in pinang. Is auction cheaper? How can i find out what properties are being auctioned?
Hope you can help!
Many thanks, Anna

bennyong said...

First of all, thank you for your comments. There is a major property auction company in penang called Palmahousing. Their website should be palmahousing.com. It is usually cheaper to get at auctions but it becomes not worth it when the tenants have not move out and you will have loads of trailing work before you can move in. There are loads of research that goes in before bidding for a property. My advice is that you buy from real estate agencies like popular ones in Penang such as New Bob and Henry Butcher. BTW, I wish I would have stayed longer in London and get my working permit instead of coming home. sigh....

I hope my advise helps....

Benny Ong