iProperty.com sat down with Alan Poon, Founder and Chief trainer of Superior Wealth Mastery to seek his insight on how will this affect the auction industry.
It was recently announced that property at auctions could be bid online starting from July this year. What is your opinion on this and is this move workable?
The recent online bidding for auctioned properties announcement to replace the manual Public Auction in High Courts is definitely a bold move and one step forward initiative by the Judiciary. Our auction laws in Malaysia are quite out-dated. Hence, when I first heard of the idea that was mooted in September 2014, I was quite delighted at the same time cautious about its implementation timeline. Now that this plan will be coming to fruition, it is highly commendable and I am optimistic about the whole idea.
Being online would mean that the speed of transaction can now be faster as it eliminates the dreaded process and paperwork that is part of the current manual system. This will then work in favour of the banks which could look forward to better days in recovering non-performing loans.
However, the same may not be applied to the auctioneers. It would be a concern when it comes to whether the role of auctioneers is still relevant in transiting towards an online platform (for titled properties at the moment). For this particular change in the auction industry to work effectively, all areas of weaknesses need to be identified and enough support must be garnered from the stakeholders including the market as well. For a start, it would be a viable option to test out this e – bidding system from within a particular state first so that it can be a role model for nationwide implementation.
How will the e-bidding benefit aspiring property buyers/investors?
As long as there is internet access, e-bidding allows for a prospective buyer/investor to bid from the comfort of their own home/office. Especially for those who are challenged by distance, this proposal is very much lauded for its convenience and time-saving perspective.
Being online also means that the auctioned properties will be able to be assessed by more potential bidders without being limited by the size constraint of the bidding hall. Therefore, the new format can reach a wider scope of the targeted market. This will subsequently reduce the inconvenience of having the actual owner to attend the auction process personally in High Court while maintaining a form of control when it comes to the actual value to place their bid.
More importantly, we could see a reduction in collusion or total elimination of syndicates as their presence do intimidate potential bidders, disrupting the fair chance of healthy competition between bidders. These cartels which have been the usual norm seen to operate in the current manual system will then no longer pose a threat to disrupt genuine buyers from bidding.
Will online property auction have an impact on the property market?
Property auction being an untapped market has already huge potential to grow. With the attractiveness of a seamless integration through online bidding, the property auction market may see a shift in popularity once the confusion dust has settled. Coupled with the rising property prices and affordability issue plaguing the Gen-Y market, more property auction transactions can be expected in this category as investors come in to look for their ‘prized’ asset. For once, the auction property market can be seen as a source to meet the housing needs of the population with the Midas touch of technology!
As 2016 is said to be a buyer’s market, what is your projection for the property auction market this year?
Firstly, I beg to differ. I am of the opinion that a buyers’ market can happen at all stages of the property cycle subject to criteria and the demand of the people in certain geographical areas. In fact, I would rather lean towards 2016 being a renters’ market as I foresee the continued 2015 wait-and-see-first attitude of buyers as they tighten their spending when it comes to the choices of the properties being offered in the new development segment. That being said, the ready ones are those who will take up the opportunity to offer to purchase especially when the secondary market present deals that are tempting and too good not to be taken immediately.
As for the auction property market, it has been known already that certain banks are quick to foreclose a property when the owner has ‘defaulted’ in payment for as quick as two months of their mortgage payment. Previously the duration before an action is taken to effect the Power of Attorney is six (6) months of nonpayment. The speed of foreclosure definitely would add more supply to the distressed property market readily for any takers to net in a steal!
For 2016, besides those who cannot fulfil their loan obligations, we should see interest into property auction market increasing as sellers with lesser holding power will consider auctioning some of their properties instead of waiting for the right buyer to come along.