Question 1

What is a property auction (lelong)?

Accepted Answer

A property auction is a public sale of a property that has been repossessed by a bank or financial institution due to the owner's failure to pay their mortgage. The property is sold to the highest bidder, typically at a price below market value.

Question 2

How much deposit do I need?

Accepted Answer

Typically 10% of the reserve price, paid via bank draft or cashier's order on auction day. Some auctions may require 5%. Check the Proclamation of Sale for exact terms.

Question 3

Can I get a bank loan for an auction property?

Accepted Answer

Yes, most banks offer financing for auction properties. It's strongly recommended to get a loan pre-approval before the auction. Note that the balance must be paid within 90–120 days.

Question 4

What happens if there are no bidders?

Accepted Answer

The property goes for re-auction, usually with a 10% reduction in the reserve price. This can happen multiple times, making later rounds potentially better deals.

Question 5

Can I inspect the property before the auction?

Accepted Answer

You can do a drive-by inspection and check the exterior. Access to the interior is usually not possible as the property may still be occupied. Always do a land title search.

Question 6

What are the risks of buying at auction?

Accepted Answer

Key risks include: inability to inspect the interior, existing tenants/occupants, outstanding debts (maintenance, utilities), structural defects not visible from outside, and the strict payment timeline.

Question 7

What is a Proclamation of Sale (POS)?

Accepted Answer

The POS is the official document that sets out the terms of the auction sale, including the reserve price, deposit required, payment period, and conditions of sale. Always read the POS carefully before bidding.

Question 8

What is the difference between 1st, 2nd, and 3rd auction?

Accepted Answer

The first auction starts at the bank's assessed reserve price. If no bidder, the property is re-auctioned (2nd auction) at 10% less. This continues for subsequent rounds, each 10% lower than the last.

Question 9

Can foreigners buy auction properties in Malaysia?

Accepted Answer

Foreigners can buy auction properties, but they must meet the minimum property price threshold (varies by state, typically RM1 million) and obtain State Authority approval. Bumiputera-reserved lots and Malay reserved land are restricted.

Question 10

What additional costs should I budget for?

Accepted Answer

Beyond the purchase price, budget for: legal fees (SPA and loan agreement), stamp duty, valuation fees, outstanding maintenance/utilities, renovation costs, and real property gains tax (RPGT) if applicable on resale.

Question 11

What is the difference between LACA and Title auction?

Accepted Answer

A Title auction is for properties with individual or strata titles already issued. A LACA (Loan Agreement cum Assignment) auction is for properties without individual titles, typically newer developments. LACA properties may have additional legal complexities and longer completion timelines.

Question 12

How long do I have to pay the balance after winning an auction?

Accepted Answer

Typically 90 to 120 days from the auction date, as stated in the Proclamation of Sale. If you're using a bank loan, it's crucial to start the application process before the auction to ensure timely payment.

Question 13

What happens if the property is still occupied after I buy it?

Accepted Answer

You will need to obtain a court order for vacant possession. This can take 2-6 months and involves additional legal costs. It's important to factor this into your timeline and budget when bidding.

Question 14

Can I buy an auction property under a company name?

Accepted Answer

Yes, companies can purchase auction properties. The company must provide the relevant documents including the board resolution, Form 24, Form 49, and the memorandum and articles of association.

Question 15

What is BMV (Below Market Value) and how is it calculated?

Accepted Answer

BMV refers to the discount between the auction reserve price and the estimated market value of the property. For example, if a property's market value is RM500,000 and the auction price is RM350,000, the BMV discount is 30%. Higher auction rounds typically offer deeper discounts.

Question 16

Is stamp duty different for auction properties?

Accepted Answer

No, stamp duty rates are the same as regular property purchases. As of 2025, rates are: 1% for the first RM100,000, 2% for RM100,001 to RM500,000, 3% for RM500,001 to RM1,000,000, and 4% above RM1,000,000. First-time buyers may qualify for stamp duty exemptions.

Question 17

How do I find out if there are outstanding debts on the property?

Accepted Answer

Before bidding, do a land search at the Land Office and check with the management office for outstanding maintenance fees. You can also check with utility companies (TNB, water authority) for unpaid bills. As the buyer, you may be liable for some outstanding charges.

Question 18

How do I attend an online property auction in Malaysia?

Accepted Answer

Some auctioneers now offer online bidding. You register on their platform, submit your deposit electronically, and bid in real-time during the auction. However, most Malaysian property auctions are still conducted physically at the auctioneer's office or court. Check the Proclamation of Sale for the auction format and location.

Question 19

What is a reserve price in a property auction?

Accepted Answer

The reserve price is the minimum starting bid set by the bank or court. Bidding begins at the reserve price and goes up in fixed increments. If no one bids, the property is withdrawn and re-auctioned later at a lower reserve price (typically 10% less). The reserve price is stated in the Proclamation of Sale.

Question 20

Can I back out after winning an auction bid?

Accepted Answer

Technically yes, but you will forfeit your 10% deposit entirely. Once you sign the Memorandum of Sale, you are legally committed to completing the purchase. If you fail to pay the balance within the stipulated period (90-120 days), the deposit is forfeited and the property goes back to auction.

Question 21

How do I check if a lelong property has a clean title?

Accepted Answer

Conduct a land title search at the relevant Land Office (Pejabat Tanah). This costs RM50-100 and reveals the registered owner, existing charges (mortgages), caveats, easements, and any restrictions. Also check for any pending litigation. Your lawyer can help with this due diligence.

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