auction advertisements, auctioneer, bidding price, closed bid auctions, down payment, foreclosed property, government owned property, high-value private properties, litigation issues, loans, open bid auction, property auctions, property auctions in Pakistan, security deposit, taxes, unpaid bills
Property auctions are gaining traction in Pakistan, where high-value private and government owned properties go under the hammer. A significant number of foreclosed properties (that were used as collateral and are being sold by banks and other lending institutions to recover defaulted loans), as well as those located in remote areas that are difficult to sell through conventional methods, can be purchased at such auctions.
Properties at these auctions are usually priced five to 10% less than their current market value, and buyers usually do not have to pay third party commissions to agents and dealers, which makes them more economical in the long run.
If you are looking to purchase property through auctions, factor in the following:
- Look out for auction advertisements in newspapers and real estate websites.
- Prior to the auction, visit the property in person to determine if it fulfils your requirements.
- Determine the status of unpaid bills, taxes, loans and any litigation issues associated with the property; this will help you calculate any additional costs you will have to incur.
- Auctioneers advertise the estimated price of the property – the range varies between 80 and 110% of the value – and this will give you an estimated bidding price, ensuring that you do not overspend.
- In order to reserve your spot, you will be required to submit a refundable security deposit (approximately five to 10% of the property value) with the auctioneer at least a month before the auction.
- If you win an open bid auction, you will have to make a non-refundable down payment, which usually ranges between eight to 10% of the bid value.
- In closed bid auctions, you will have to write your bidding amount on paper and submit it to the auctioneer, along with a pay order amounting to 10 to 25% of the estimated price. All bids are opened publicly, and if you are the highest bidder, the property will be transferred in your name. The remaining amount will be required within 30 days of the auction to confirm ownership.
– Syed Wajeeh-ul-Hasan Naqvi
First published in the Real Estate Section of The DAWN National Weekend Advertiser on November 2, 2014.