SINGAPORE: For Singapore home buyers staring at million-dollar price tags, an auction may sound like a chance to snag a home below market price. But this is not necessarily the case.
Take the September auctions of 25 high-end properties seized in the S$3bil (US$2.34bil) money laundering case as an example.
They attracted interest from genuine buyers, owners of nearby developments getting a feel of the market, and curious bystanders wanting a peek into the lifestyle of the criminals.
Only four condominiums – two each at Martin Modern and Wallich Residence – found buyers at the SRI auction on Sept 23.
The other properties were withdrawn either because they failed to meet their reserve prices or did not attract any bids.
Separate auctions held by Edmund Tie and Company (ETC) and Knight Frank concluded with no sales for the same reason.
The reserve price is the minimum price the seller has authorised for a sale.
It is usually confidential and should not be assumed to be identical to the advertised guide price or opening bid.
If the bidding does not meet the reserve price, the property generally remains unsold at that auction.
The mixed results come as Singapore’s property auction market prepares for a larger supply of listings, with more than 80 units confiscated in the money laundering case to be sold till mid-2027.
Auction listings rose for a fifth consecutive quarter in the second quarter to 157. They reflect a range of circumstances, including mortgagee and estate sales, liquidations, and owners seeking an alternative route to market.
Not all listings were for luxury homes.
Joy Tan, head of auction and sales at ETC, a member of Realion Group, said sellers and buyers increasingly see auctions as a transparent way to transact.
Buyers can deal directly with serious sellers and compete fairly for properties.
Auctions also appeal to buyers and investors seeking quality properties. Those with collective sale potential, freehold tenure or prime locations near popular schools, amenities or MRT stations are likely to continue attracting bidders and fetching premium prices despite market challenges, she said.
More buyers in their 30s and 40s are joining auctions, many to buy their first home or to upgrade.
Price conscious and well-informed, they see auctions as a way to get competitively priced properties, widening the buyer pool for mass-market and mid-tier homes.
As mortgagee or bank sales account for a large share of auction listings here, auctions are often naturally associated with bargains. We imagine a distressed seller, savvy buyers and a property at a knock-down price.
But Tan Tee Khoon, head of auction and sales at Knight Frank Singapore, said buyers should not assume that a property being sold by a bank, an estate, a company or the authorities will be cheap.
Properties at auction come with guide prices, which take into account recent comparable transactions, market conditions, the property’s location, tenure and condition, as well as the seller’s instructions and reference to valuations in some cases.
“Even in a mortgagee sale, the lender has a duty to act in good faith and take reasonable care to obtain a proper market price at the time of sale. Recovering the outstanding loan does not, by itself, justify accepting any price,” Tan said.
His advice is to judge a potential bargain against recent comparable transactions and the total cost of ownership.
A large reduction from the asking price does not necessarily make a property good value, he warns.
Also, never confuse an auction guide price with the property’s fair value.
A guide price is not a valuation. It is an indication of where bidding may start or where the seller expects the property to attract interest, said Nicholas Mak, chief research officer of Mogul.sg, a local property portal.
He said buyers should conduct necessary due diligence, such as visiting and viewing the property units before attending the auction, just like any normal buyer would do before buying any resale property unit.
They should check the condition of the units, including looking out for any wear and tear, repairs or renovations.
“Suppose you find a property with a market value of S$2mil and manage to secure it at auction for S$1.9mil.
“At first glance, you have saved S$100,000.
But now suppose the property requires S$50,000 to address defects you had not anticipated, on top of the S$100,000 renovations you had budgeted for. Suddenly, your S$100,000 “discount” has disappeared.
“So, when deciding on your bid, your calculation should include the purchase price, taxes and duties where applicable, legal fees, financing costs, renovation, repairs, maintenance and a contingency reserve,” he said.
The buffer is especially crucial for “as-is, where-is” sales without physical viewings.
Due diligence is harder as buyers must assess the asset using available information and conditions in the surrounding area rather than inspecting it themselves, ETC’s Tan said. Such a sale can leave the buyer responsible for defects, clearance or rectification work, Tan added.
He said the sale description helps buyers understand who is selling and why, and determines their rights and obligations.
In an owner sale, the seller may simply prefer an auction and may not be in financial trouble. In a mortgagee or bank sale, a lender is usually selling a repossessed property after the borrower defaults. Buyers should check the lender’s authority to sell and the protections in the contract.
In a distressed sale, the seller is under financial pressure, but the label does not identify who is legally selling. It could be the owner, a mortgagee, a trustee or another authorised seller.
There are also involuntary, government-enforced or court-ordered sales, such as the auctions of properties seized from the money laundering criminals, which were handed over by the police to audit firm Deloitte for liquidation in August 2025, with the proceeds going into the government’s consolidated fund. — The Straits Times/ANN
