What must you know before buying an auctioned property?

Sign Of The Times - Foreclosure
Creative Commons License photo credit: respres

Buying auction or foreclosed real estate property is exciting because you know you may get a property at a price much lower than the market price. But buying an auction property is by no mean easy, there are many things you should look for when buying an auction property.

Type of auction
In Malaysia, there are two types of auction for foreclosed properties:
1) LACA (Loan Agreement Cum Assignment) auction – auction done by banks for properties without individual/strata title.
2) Non-LACA auction– auction done through High Court for properties with individual/strata title.

It is very important to know if a property that you want to bid is a LACA or non-LACA property because there are some differences that you must know.

– For LACA property, deposit with auctioneer is normally 5%, while for non-LACA property the deposit is 10%.
– In Johor Bahru, if there is no successful bidder for a LACA property, the next auction for the property can be as soon as after another month. But for non-LACA case it will take around half a year time because of the troublesome procedures of High Court.
– In both cases, however, reserved price of the property in the subsequent auction will be 10% cheaper than the previous reserved price.
– Balance purchase price of LACA property is normally settled within 90 days after a successful bid, while non-LACA case allows you to settle the balance within 120 days.

Title and condition of property
Before going to the actual auction, buyers are advised to do the necessary inspection on the property and perform necessary search at local land office to confirm the rightful owner of the property. This is very important to make sure if the property is worth bidding.

Performing land search can make sure if the property has been issued with individual/strata title. If you found the previous owner’s name has already being registered on an individual title of the property but the property is under LACA auction, you should voice your doubt to the auctioneer.

As there may be difficulties involved in inspection of the auction properties, you may have to allow for repair cost as sometime the exact condition of the property cannot be ascertained.

Vacant possession
Since auction property is not guaranteed with vacant possession, if you found someone occupying the property during your inspection, be prepared to spare some of your time and effort to evict the occupant out of the property after you successfully bid the property.

According to conveyancing lawyer, to legally evict occupants out of a property, first you must be the owner of the property. Once you are officially the owner of the property, you can apply to distress the occupants through a lawyer before you really need a court order. This may take about 3-4weeks to process a distress order and cost around RM1500-RM2000. However, the best way is to speak to the occupant and let them move out by themselves.

Outstanding payment
Sometime there may be many outstanding bills like assessment, quit rent, maintenance charges or utilities bills that have yet to be settled for an auction property. Apportioning outstanding payment between yourself and the bank that called for the property to be auctioned may take some time. Normally you will need to pay all the outstanding bills after you successfully bid the property and then submit the receipts to claim the bank’s portion from the bank through your lawyer.

The ways of settlement are stated in the proclamation document of each auction property. You can get a copy of the proclamation document from auctioneer or property agent appointed by bank at least 2 weeks before the auction date.

Balance purchase price
If you intend to take up a loan for your auction property, be careful that the release of payment from your financing bank may rather slow and make 90 or 120 days seem like a very short time. Though certain banks allow pre-approval of loan for auction property before the auction date, it would be easier if you have already spared some cash to pay the balance purchase price. This is to prevent your deposit being forfeited due to late payment caused by any possible reason.

It is because of the uncertainty and hassle involved in buying an auction property that make the general public reluctant to even try. Sometime even when the property is priced very cheap, there may be not many or no bidder. However for those who are daring, with strong heart and financially sound, auction may just present an irresistible opportunity for fantastic return on investment.

Some other useful information about buying an auction property in Malaysia:
How to bid?
Tips of buying auction properties (Johor)

Banks’ auction lists:

Recommended auctioned property agents (Johor Bahru) appointed by banks:
Mr. Lee (012-7800 677) from C.G. Lee Realty
Mr. Wong (012-7250 299) from Henry Butcher Sdn. Bhd


About The Author


Coming from a humble little town named Tangkak in north Johor state of Malaysia, I am so lucky to have chances to learn and work both in Johor Bahru and Singapore - a conurbation with 6.49 million still fast growing population - since year 1996. Hope now I can have a chance to contribute back to the community by sharing what I see, what I know and what I learn in this wonderful place.


  • KCLau

    Reply Reply February 10, 2009

    I admit that I never really consider to buy an auctioned property just because of the tedious due diligence works.

    One particular thing is that the potential bidder can’t inspect the property. How do you go around this?

    • ongkl

      Reply Reply February 11, 2009

      It is necessary to conduct on site inspection of an auctioned property and its surrounding neighbourhood to ascertain the physical conditions of the property. You may not be able to inspect the interior condition of a house. But you can ask around the neighbourhood who may have visited the house. From the exterior condition also you can have a rough idea how much cost is needed to refurbish the house.

      The stage of maintenance has a significant effect on property’s value. Don’t go for the deal unless you are confident that you understand the value of the property and the possible costs required.


  • WY

    Reply Reply February 10, 2009

    Thx.. a very informative post on auctioned property.

    what does LACA stand for ?

    • ongkl

      Reply Reply February 11, 2009

      Thank you, WY. LACA stands for Loan Agreement Cum Assignment.

  • ck5354

    Reply Reply February 11, 2009

    Do you have any contacts of auction property agent at KL?

    Thank you.

    • ongkl

      Reply Reply February 11, 2009

      Hi ck5354, you may contact Mr Wong of Henry Butcher for his colleagues in KL.

  • Toh Kim Huat

    Reply Reply February 26, 2009

    Find your advice on what to look for when buying auction property enlightening.Please include me in your regular updates on this matter.
    I have a few houses in N.S which I am not able to sell.Can I place them for auction even though they are all free from encumbrance?

    Thank you
    Toh k.h.

    • ongkl

      Reply Reply February 27, 2009

      Hi Kim Huat,

      You can check with the auction houses near your place to see if they offer such services.
      I recommend you to contact Property Auction House Sdn Bhd to find out more detail about this option.

      To receive our regular updates, please subscribe here .


  • Hubert Ong

    Reply Reply June 6, 2009

    Hi OngKL,
    Oops, I am not working for Property Auction House.
    I just sharing auctioneer’s information with investors in my previous various blog posting.

    FYI, I am Accountant & property investor.

    • ongkl

      Reply Reply June 8, 2009

      Sorry for the mistake, Hubert. I have removed your name from the previous comment.


  • Jason Han

    Reply Reply June 24, 2009

    I just went to an auction house today at Henry Butcher.

    Well, one of the auction property I intend to bid was withdrawn this morning (Tampoi Indah area).
    So only manage to see 1 auction in action.

  • imshawn

    Reply Reply August 13, 2010

    Hi OngKL,

    I found your website recently & found it is quite informative, especially on property auction. Thinking of investing in auction property, could you shed some lights on how to choose a good location? Any experience or real case to share?

  • Tan KL

    Reply Reply November 2, 2011

    Hi Ong KL,

    There are some doubts on auction properties which I like to get your advice. I have a friend already bought a auction property, It is an Apartment from bank with all the legal document and SPA signed and already start paying bank loan, but after 10 months of waiting, the Apartment strata title still haven’t transfer to him. He got the keys and Access card of that property.

    Without the Strata Title under his name, This is means that He still not the lawful owner of this property right? . But at this point of time, He would like to rent out this property thru agent. It is correct to do so? If he insist to rent out this unit? what the worst senario can happen?


    • ongkl

      Reply Reply November 16, 2011

      Hi Tan,

      Your friend should consult his lawyer before doing anything on the property.


  • YS

    Reply Reply February 13, 2012


    Can i know, the 5% and 10% deposit is for downpayment of the unit we bid successfully or it is commission paying to the auction agent?


  • jeff lee

    Reply Reply March 20, 2013

    Hi all,

    I just purchase a property through auction at local high court recently?

    My questions:


  • jeff lee

    Reply Reply March 20, 2013

    Dear all masters:)

    I just purchase a property through auction at local high court recently?

    My questions:

    1) How much is the charges for the preparation of the documentation that (including stamping fees) need to be sign by the winner of the bidder? I sign 4 documents on that day once i successfully bid that house, and it cost me RM 100/= ,which i pay to an agent. Is that a normal fees? what is the actual amount?

    2) What is the legal fees from stamping, loan bank arrangement and agreement if i engage with the lawyer/legal team to manage my loan about RM 63K only. Property auction price at RM 70K, single terrace house. Because the fees of course will be without Selling and purchase agreement, as this is through auction.

    Thank you very much and shall look forward to hear from you soon.

  • CR

    Reply Reply February 28, 2016

    Hi, I would like to know if its possible to bid for the house auctioned by the bank without going through the agent?

    • ongkl

      Reply Reply March 4, 2016

      Hi CR,

      Yes, it is possible to do it yourself.
      Just follow strictly the procedures stated in proclamation document and liaise with auctioneer directly.

  • ykchi

    Reply Reply July 22, 2016

    Hi ongkl,
    What happen to the surplus balance after total due to lending bank. Will the ex-owner of house get back the excess cash in non laca foreclosesure house auction.

    Rgds and Tq.

    • ongkl

      Reply Reply July 23, 2016

      Hi ykchi,

      It depends on the terms and conditions stated in loan agreement.

      Generally, after deducting outstanding loan amount and all other costs incurred by a default such as penalty, interests, costs of legal, auction and encumbrances against the property, any surplus from auction proceed should be returned to the borrower.

  • TY

    Reply Reply October 14, 2016

    Hi ongkl,

    I have some questions regarding auctions in general. You mentioned 2 types of auction: LACA (done by banks and without strata title) and Non- LACA (through order for sale with strata title). My questions are:

    1) Where will this scenario falls under i.e. auction done by banks but there is strata title?

    2) Is there a need to inform the defaulters of the auction going to be held only once (if property managed to be sold off at the first auction) or every single time (if there are subsequent auctions)?

    3) What if the property is a vacant land? Are the process of auction the same?

    • ongkl

      Reply Reply October 15, 2016

      Hi TY,

      1) Non-LACA. It’s a public auction done in High Court for property with title and it’s applied by bank’s lawyer.

      2) Before the lending Bank can apply to the High Court for an “Order for Sale”, Section 254 of the National Land Code of 1965 requires that the lending Bank issues to the defaulting borrower a “Default Notice” in Form 16D (a form prescribed in the National Land Code of 1965). This Form 16D must be served to the borrower in person to ensure that the borrower is notified of the foreclosure proceedings prior to an auction. The same procedures should apply for any subsequent auction (if any).

      3) Yes.

  • Tan y y

    Reply Reply December 16, 2016


    May i ask if a foreigner can buy an auction property in Malaysia? If so, are there any conditions which do not apply to Malaysian buyers?


    • ongkl

      Reply Reply December 16, 2016

      Hi Tan,

      Foreigner is not allowed to buy foreclosed property in Malaysia.

  • Johnson

    Reply Reply March 9, 2018

    Hi Ong if no bid for high court prop auction,
    Anyway contact the bank direct,?
    Negotiate with bank buy prop;?
    How access auctioned property to view?

    • ongkl

      Reply Reply April 6, 2018

      Hi Johnson,

      Sorry for the late reply.

      The only way to do so is to reach the person-in-charge of bank through the auctioneer/agent involved.

  • chee

    Reply Reply May 28, 2018

    Hi Ongkl,

    I am a property agent and I have a friend who wants to buy an auction property, we agreed that I will perform all the due diligence work for him and he will pay me the agent fee. My problem is I dont know who will be the one paying the fee. Is it the bank? or the client? Or does the auctioneer pay me the fee? I was thinking the auctioneer is the one acting as middleman so I wouldnt get the fee. Please enlighten me, much appreciated!

    • ongkl

      Reply Reply October 9, 2018

      Hi Chee,

      You may want to check this with the auctioneer first as they are appointed directly by the banks.

  • sunny

    Reply Reply July 12, 2018

    Hi Ongkl,

    why the LACA is without strata title? is it safe to bid?

    • ongkl

      Reply Reply October 9, 2018

      Hi Sunny,

      It is common in Malaysia that title deed of a project is not ready by the time of project completion, thus we have LACA to facilitate the auction of such property. It is rather safe if due diligence is performed thoroughly but the potential risk is definitely higher than non-LACA.

      • Kennu

        Reply Reply October 19, 2019

        Hi , what is the potential risk you mean for laca . Tq . I interest to bid on a laca unit . Pls advise. Tq


    Reply Reply October 9, 2018

    i just want to know can a property under master title sold without a court order.

    what will be the duration or months of arrears (for house under Mastet Title) before the banks can start its auction prossess

    I am asking this because my banker told me that they have the right to start the action presess when the due is 1.51 months and property undet Mastet title do not need court order.

    your soonest reply is appreciated.

    • ongkl

      Reply Reply October 9, 2018

      Hi Solomon,

      I am afraid what your banker told you is true. You should double check this with your lawyer instead.

  • Sophie

    Reply Reply December 10, 2018

    Hi Ongkl, I would like to ask for your opinion is it worth the hassle to bid for a condo (600k market value) with 450k reserved price but found out that there are still occupants in the unit. The good thing is the unit still quite recent (completed on 2016), thinking that the condition would not get too bad. However, living just down the unit we always hear sort of hammering sounds on the unit above, not sure what are they doing in there…

    Thanks in advance for your advice!

    • ongkl

      Reply Reply December 13, 2018

      Hi Sophie,

      It really depends on your risk appetite and tolerance as evicting occupants from an auctioned property can sometime be quite time consuming and challenging. You can try to contact the occupants first and have a better idea who they are since you are living down the unit. If you are lucky maybe you can have a peaceful arrangement with them to vacate the unit after your successful bid.

  • a.nagarajan

    Reply Reply February 21, 2019

    Dear Sir,

    I would like to know my wife’s property auction in 2007 but the full settlement for the loan only made in 2013. is this allowed under the law.

    would appreciate your reply

    Thank you

  • Amu

    Reply Reply October 14, 2020

    I bought a auction Property on 8/8 but now developer don’t want transfer MOT direct to new buyer which is me.they said must transfer to 1st buyer then only 2nd.the cost for both MOT and legal fees almost 50k which equivalent to deposit we paid. I try convince the developer but no point. Any other help I can get to solve this.thank you.
    And this will be my 1st house

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