June 14, 2009
Property auctions shedding bad image
Home owners become more receptive to mortgagee sales as a way to secure a better price
By Elizabeth Wilmot
Property market watchers will likely be keeping an eye on the 'forced-sale' auction on June 23 of two units at Jasmine Court condominium along Upper Thomson Road.
The two units, owned by one person, will be offered as MCST (management corporation strata title) sales at the Knight Frank auction.
The last time Knight Frank offered such a sale was in April last year. A condo's management can initiate an MCST sale if a unit owner is in arrears on monthly maintenance and service payments.
Given the current downturn, there has also been talk that the number of mortgagee sales - when owners are unable to refinance their home loans - may increase.
Mr Shaun Poh, DTZ's senior director for investment advisory services and auction, said, however, that in the short term 'maybe (in the) next three to six months, I will not expect any increase in the number of mortgagee sales'.
He said banks this time round are quite prepared.
'That's why I think there is no panic repossession or foreclosure. The banks are not pulling the plug and are more prepared to talk to borrowers about restructuring their loans,' he explained.
Colliers International's figures show that the number of mortgagee sales across all auction houses has not seen a large jump in the first five months of the year.
The highest number of mortgagee-sale auctions was 21 - in February - while the lowest was 15 - last month.
Ms Grace Ng, Colliers' deputy managing director and auctioneer, said: 'I think the banks prefer to give the owners time to manage the property on their own.'
She said, however, that the number of mortgagee sales might rise in the third or fourth quarter of the year.
'Normally, there is a lag time between when the bank repossesses the property and when it puts it on the market.'
Colliers' data also showed that some $18.5 million worth of properties were sold across all auctions - forced sales or otherwise - last month.
'Owners are now quite receptive to putting properties up for auction. They have more or less accepted it as an acceptable mode of sale, compared to maybe a decade ago, when mortgagee sales had a bad image,' said Ms Ng.
Ms Mok Sze Sze, the head of auction and sales at Jones Lang LaSalle, said some good deals were transacted during her firm's last auction last month.
An example, she said, was a semi-detached house in Namly Garden. It was withdrawn in an auction in January at the highest bid of $2.8 million. Last month, it was sold for $3.7 million.
'With the recent improved market sentiment, we are seeing more owners' sales coming on board, with some owners looking at auctions as a way to attain the desired optimum price within a definite timeframe,' she said.
Perhaps another sign of the improved times is the confidence the owner of a colonial bungalow, in the choice Belmont Road area, has in getting an optimum price.
He will put his property, with a whopping land area of 32,627 sq ft and an indicative price range of $850 to $1,000 per sq ft, up for bidding at Knight Frank's auction next Tuesday.
Ms Mary Sai, the executive director of Knight Frank, said: 'Bungalows are hardly put up for auction. It's basically very rare property.'