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Participating in auctions and purchasing property
How to Buy Property
This procedure covers every step from pre-sale preparation to transaction, and is applicable to all types of properties such as residential, commercial, office, car parking spaces, etc. It allows you to master the whole auction procedure easily.
- Step 1: Pre-Auction Preparation
- Step 2: Auction Day Procedures
- Step 3: Post-Completion Procedures
- Step 4: Risk Management and Points to Note
Step 1: Pre-Auction Preparation
Identify target properties
View Auction Catalogue
- Study the auction catalogue and select properties that meet your budget and needs.
- On-site inspection: check the condition of the property (renovation, structure, water leakage, etc.)
- Land Registry check (title, mortgages, litigation)
- Appointment of a solicitor to review the deed (to ensure there are no hidden clauses or title problems)
- Confirmation of ability to pay (full payment is required in the near future)
- Obtain ‘pre-approval’ from bank in advance if mortgage is required
- Prepare a 10% deposit cashier's cheque (payable to the auctioneer or nominated solicitor's firm).
Step 2: Auction Day Procedures
Arrive early to register for the auction
Recommended Property Auctioneers in Hong Kong
- It is recommended to arrive at the venue 15-30 minutes earlier
- Produce identification documents (Individuals: identity card/passport; Companies: business registration certificate/authorisation letter)
- Collect the catalogue
- Read the Conditions of Sale carefully.
- Auctioneer's Opening
- Open Bidding Stage
- Result of Hammer Down Judgement
• Read out basic information about the property (address, area, use)
• State the starting price and the bidding range per unit (e.g. HKD $100,000 per unit).
• Bidders raise their hands to answer the bid and the auctioneer confirms the bid.
• When the auctioneer repeats ‘First...’ and ‘Second...’, the auctioneer confirms the bid. Second...’. When the auctioneer repeats ‘first ... second ...’, it is the last chance to bid.
• The maximum bidding limit should be set in advance to avoid excessive bidding in the atmosphere of the scene.
• If the highest bid reaches/exceeds the reserve price: the auctioneer strikes the hammer to declare a sale.
• If the highest bid does not reach the reserve price: the auctioneer declares the auction unsold.
• The hammer blow has legal effect and cannot be withdrawn.
- Sign the provisional sale and purchase agreement on the spot
- Pay 10% of the hammer price as deposit (cash/cashier's order/cheque)
- Pay 1% of the transaction price as commission
- Confirmation of transaction date (usually within 1-3 months)
Step 3: Post-Completion Procedures
Payment of Remaining Balance
- Pay the remaining 90% of the purchase price within the specified period.
- If you choose to take out a mortgage, make sure the bank will release the money on time.
- Purchaser's solicitor to organise the transfer of property rights
- Payment of stamp duty to the Inland Revenue Department (to be completed within 30 days of signing the Provisional Agreement)
- Registration of title at the Land Registry
- Taking possession of the property on the contract date
- Inspection of property condition (consistent with pre-auction inspection)
- Transfer of water and electricity meters
- Management fee registration
Step 4: Risk Management and Points to Note
Consequences of default
- 10% deposit will be forfeited if payment is not made on time.
- Vendor may seek to recover the difference in price for re-auction.
- Auction is an ‘as is’ transaction and buyers are responsible for the defects.
- Common problems: unauthorised building works, non-payment of management fees, tenancy disputes
- Appoint a solicitor to follow up the whole transaction
- Purchase property insurance to reduce the risk of ownership
Want to know more about property auctions?
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