More properties going under the hammer, but don’t expect dirt-cheap buys

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SINGAPORE – For Singapore home buyers staring at million-dollar price tags, an auction may sound like a chance to snag a home below market price. But this is not necessarily the case. 

Take the September auctions of 25 high-end properties seized in the $3 billion money laundering case as an example. 

They attracted interest from genuine buyers, owners of nearby developments getting a feel of the market, and curious bystanders wanting a peek into the lifestyle of the criminals.

Only four condominiums – two each at Martin Modern and Wallich Residence – found buyers at the SRI auction on Sept 23.

The other properties were withdrawn either because they failed to meet their reserve prices or did not attract any bids.

Separate auctions held by Edmund Tie and Company (ETC) and Knight Frank concluded with no sales for the same reason.

The reserve price is the minimum price the seller has authorised for a sale at auction. It is usually confidential and should not be assumed to be identical to the advertised guide price or opening bid.

If the bidding does not meet the reserve price, the property generally remains unsold at that auction. 

The mixed results come as Singapore’s property auction market prepares for a larger supply of listings, with more than 80 units confiscated in the money laundering case to be sold till mid-2027. 

Auction listings rose for a fifth consecutive quarter in the second quarter to 157. They reflect a range of circumstances, including mortgagee and estate sales, liquidations, and owners seeking an alternative route to market. Not all listings were for luxury homes.

Joy Tan, head of auction and sales at ETC, a member of Realion Group, says sellers and buyers increasingly see auctions as a transparent way to transact. Buyers can deal directly with serious sellers and compete fairly for properties.

Auctions also appeal to buyers and investors seeking quality properties. Those with collective sale potential, freehold tenure or prime locations near popular schools, amenities or MRT stations are likely to continue attracting bidders and fetching premium prices despite market challenges, she says.

More buyers in their 30s and 40s are joining auctions, many to buy their first home or to upgrade.

Price conscious and well-informed, they see auctions as a way to get competitively priced properties, widening the buyer pool for mass-market and mid-tier homes. 

Auction bargain myth

As mortgagee or bank sales account for a large share of auction listings here, auctions are often naturally associated with bargains. We imagine a distressed seller, savvy buyers and a property at a knock-down price. 

But Tan Tee Khoon, head of auction and sales at Knight Frank Singapore, says buyers should not assume that a property being sold by a bank, an estate, a company or the authorities will be cheap. 

Properties at auction come with guide prices, which take into account recent comparable transactions, prevailing market conditions, the property’s location, tenure and condition, as well as the seller’s instructions and reference to valuations in some cases.

“Even in a mortgagee sale, the lender has a duty to act in good faith and take reasonable care to obtain a proper market price at the time of sale. Recovering the outstanding loan does not, by itself, justify accepting any price,” Knight Frank’s Tan says.

His advice is to judge a potential bargain against recent comparable transactions and the total cost of ownership. 

A large reduction from the asking price does not necessarily make a property good value, he warns. 

Also, never confuse an auction guide price with the property’s fair value. A guide price is not a valuation. It is an indication of where bidding may start or where the seller expects the property to attract interest, says Nicholas Mak, chief research officer of Mogul.sg, a local property portal. 

Mak says buyers should conduct all the necessary due diligence, such as visiting and viewing the property units before attending the auction, just like any normal buyer would do before buying any resale property unit. 

They should check the condition of the units, including looking out for any wear and tear and necessary repairs or renovations.

Suppose you find a property with a market value of $2 million and manage to secure it at auction for $1.9 million. At first glance, you have saved $100,000.

But now suppose the property requires $50,000 to address defects you had not anticipated, on top of the $100,000 renovations you had budgeted for. Suddenly, your $100,000 “discount” has disappeared.

So, when deciding on your bid, your calculation should include the purchase price, taxes and duties where applicable, legal fees, financing costs, renovation, repairs, maintenance and a contingency reserve.

The buffer is especially crucial for “as-is, where-is” sales without physical viewings.

Due diligence is harder as buyers must assess the asset using available information and conditions in the surrounding area rather than inspecting it themselves, ETC’s Tan says. Such a sale can leave the buyer responsible for defects, clearance or rectification work, Knight Frank’s Tan adds. 

He says the sale description helps buyers understand who is selling and why, and determines the buyer’s rights and obligations.

In an owner sale, the seller may simply prefer an auction and may not be in financial trouble.

In a mortgagee or bank sale, a lender is usually selling a repossessed property after the borrower defaults. Buyers should check the lender’s authority to sell and the protections in the contract.

In a distressed sale, the seller is under financial pressure, but the label does not identify who is legally selling. It could be the owner, a mortgagee, a trustee or another authorised seller.

There are also involuntary, government-enforced or court-ordered sales, such as the auctions of properties seized from the money laundering criminals, which were handed over by the police to audit firm Deloitte for liquidation in August 2025, with the proceeds going into the Government’s consolidated fund.

In all property auctions, the biggest risk is what you cannot see. Photographs and viewings may not reveal defects, illegal structures, tenancy problems, ownership issues, restrictions or unpaid bills. The risks vary by property and, importantly, the auction’s conditions of sale.

That is why reading the auction documents is a necessary due diligence. A buyer who is unfamiliar with property transactions should seriously consider getting a conveyancing lawyer to review the relevant documents before bidding.

Likewise, if the condition of the property is uncertain, professional inspection can be money well spent, than discovering an expensive problem after you have won the auction.

Before you bid, get your funds ready

Another common mistake is to think about financing only after deciding which property you want. The order should be reversed.

Know your financing capacity first.

An approval in principle should not be treated as an unconditional guarantee that the bank will fund the purchase, Knight Frank’s Tan says. A bank’s willingness to lend is also not the same thing as your ability to comfortably afford the property.

For a Singaporean buyer, affordability needs to take into account the cash and CPF requirements, applicable stamp duties, legal costs, renovation and ongoing expenses, as well as the mortgage.

Do not test your finances against today’s interest rate alone. Ask yourself: What happens if the mortgage becomes significantly more expensive?

If the answer is that you would have to cut essential spending, empty your emergency fund or depend on an annual bonus to make repayments, the property is probably too expensive. This matters particularly at auction because the process can move quickly. You do not want to discover after winning that the financing you expected is unavailable or insufficient.

Buyers must look beyond the price when bidding for a home at auction. They need to have the funds ready on time, says Alfred Chia, chief executive of financial advisory firm SingCapital.

For a typical private home resale, buyers pay a 1% option fee and another 4% when exercising the option to purchase. At auction, the immediate deposit is usually 5% or 10% of the winning bid, depending on the sale conditions.

The completion deadline is also set by the auction contract, typically at eight to 12 weeks, rather than negotiated with the seller. This can put pressure on buyers who need to sell an existing property to fund the purchase.

“Before bidding, they should confirm the deposit requirement, completion deadline and when their bank loan and eligible CPF funds can be released,” Chia says.

Beyond these funding requirements, Knight Frank’s Tan highlights three other considerations:

Buyer’s premiums and fees: Confirm in writing any buyer’s premium, administration charge or separately agreed buyer-agent fee. Any premium would be additional to the bid price.

Other purchase costs: Budget for legal fees, financing costs, repairs and applicable stamp duties. Buyer’s stamp duty and additional buyer’s stamp duty are generally calculated on the higher of the purchase price or market value, so a lower auction price does not necessarily produce equivalent tax savings.

Default risks: Late completion of the sale may incur interest. Depending on the contract and applicable law, failure to complete could lead to the buyer losing his deposit and further claims for resale losses and expenses. The potential loss can exceed the deposit.

And if you are buying an investment property, there is another calculation: How much income will it actually generate after expenses?

Know what you are bidding for

The upcoming sales of properties forfeited in the money laundering case will undoubtedly generate headlines, curiosity and competition. But the September sales have shown that an auction is simply another way to buy an asset – there is no guarantee of a bargain.

These are not ordinary distressed sales, after all, but a way to turn those assets into cash. The properties’ history does not automatically make them bargains or undesirable purchases.

Buyers should assess their market value, sale conditions, ownership costs and financing, just as they would any other property.

In short, buy the property, not the story.