Property auctions

Property has always been a good investment, especially in the midst of a global financial crisis. Pierre Faure, managing director of Malta Property Auctioneers, speaks about an innovative concept of purchasing and selling property by auction.

Property auctions are not only exciting but potentially profitable. They avoid the normal lengthy purchasing procedures that one usually has to endure.

The negotiating process is totally transparent and there is no risk of everything falling through at the eleventh hour.

For this reason, some vendors are selling their properties lower than the market value. Buying a property at auction is quite different from the more conventional buying process but quite simple in reality.

Here are some tips which a potential buyer must consider before an auction:

Malta Property Auctioneers hold auctions four to five times a year with around 30 to 40 lots being offered each time. It advertises the lots regularly in local papers and you can always register to receive the catalogue by logging on the website www.maltapropertyauctioneers.com.

Once you've seen a lot that interests you, call to make an appointment. Very often you may even ask your own estate agent to show you the lot. As when buying any property, you should make more than one viewing as you need to be aware of every facet of the property you are considering bidding.

Sometimes it may be advisable to take a builder or an architect with you to ascertain what can be done to the property and how much it is likely to cost.

There is usually only four weeks between the publication of the auction catalogue and the auction itself, so you have to act fast.

Make sure you do your research thoroughly. Compare the price and condition of the property to others that are similar. You must remember that auction properties are very often properties where the vendor needs to sell fast. So, it is essential for vendors to ask for a relatively lower price.

When you express an interest in a property to the auctioneers, there is usually a legal pack available for you to read.

The auctioneers employ a notary to do all the necessary legal work and set up a blank promise of sale. It is essential that you read this thoroughly, and if you are not sure about anything, you are free to consult your own notary or lawyer.

You will also need to make your financial arrangements prior to the auction. You must have a 10 per cent deposit with you on auction day, and you must come up with the remaining 90 per cent within the timeframe established. If you need a mortgage/bank loan, it is necessary to discuss all the financial implications with the bank. Today, most banks promise to confirm a loan within 48 hours.

When you arrive at the auction venue you will have to register and bring all the documents and identification.

You don't actually have to be there in person. You can leave a closed bid with the auctioneers or have somebody represent you (with a power of attorney).

If you are bidding on a property and it fails to meet its reserve price, the auctioneers will say that the property has been "bought in". This does not necessarily mean that this is the end of the matter. The auctioneers can still act as agents and reach a deal between you and the vendor. A vendor may be willing to reach a deal after the auction.