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Step-by-Step Guide to Purchasing Properties Through Auctions in Malaysia


Written by Fazrina Izzma

Property auctions offer a unique avenue for individuals to acquire real estate through a competitive bidding process. Whether you're an experienced investor or a newcomer to the real estate market, understanding how property auctions work in Malaysia is essential. Here's a detailed guide to help you navigate the process effectively and make informed decisions.



How do property auctions work?

A property auction works by allowing interested buyers to compete through bidding, with the highest bid winning the property. It's a way to transfer ownership from one person to another, facilitated by a registered property auction house. Unlike what you see in movies, where auctions are fancy events with lots of excitement, property auctions in Malaysia are serious business. Sometimes, properties are auctioned because the previous owner couldn't pay their home loan. In those cases, the bank takes the property and sells it to someone else through an auction.

Types of Property Auctions in Malaysia:

There are two primary types of property auctions in Malaysia:

1. Loan Agreement Cum Assignment (LACA) Auctions:

  • These auctions are conducted by banks for properties without individual titles, often referred to as strata titles.
  • Prospective buyers are required to pay a deposit, usually around 5% of the property's value, upon registration.
  • The remaining balance of the purchase price must be settled within 90 days of the successful bid.
  • Subsequent auctions may be held if there are no successful bidders initially, with the reserve price reduced by 10%.

2. Non-Loan Agreement Cum Assignment (Non-LACA) Auctions:

  • These auctions are conducted by the High Court for properties with individual or strata titles.
  • The deposit required for non-LACA auctions is typically 10% of the reserve price.
  • Buyers have a longer period, typically 120 days, to settle the remaining balance of the purchase price.
  • Similar to LACA auctions, subsequent auctions may occur with a reduced reserve price if there are no successful bidders initially.

Benefits and Considerations of Property Auctions:

Property auctions offer several advantages, including:

  • Potential for acquiring properties at lower prices compared to the traditional market.
  • Diverse housing options available for investment or personal use.
  • Opportunities for higher rental yields and potential capital appreciation.

However, buyers should also consider the following:

  • Risks associated with losing the auction or purchasing a property with undisclosed issues.
  • Potential challenges in obtaining financing or addressing outstanding payments associated with the property.


Keys Steps of Pre-Auction Preparation

1. Explore the Property:

  • Research the location and amenities of the property to assess its desirability and potential for investment.
  • Compare the auction price to similar properties in the area to determine its competitiveness and value.
  • For example, consider a property located in Mont Kiara, a sought-after area known for its upscale residences and vibrant community. Analyze recent sales data and comparable properties to determine a reasonable bidding range.

2. Check with Authorities:

  • Obtain important details about the property from the developer and land office, including its lot number, title status, and auction reservation price.
  • Request the Proclamation of Sale (POS) to understand the terms and conditions of the auction.
  • Understanding the legal implications and obligations associated with the property is crucial for informed decision-making.

3. Inspect the Property:

  • Conduct a physical inspection of the property and its surroundings to evaluate its condition and potential issues.
  • Request a copy of the Sales Declaration to gather additional information about the property.

4. Seek Legal Advice:

  • Consult with a lawyer to review the legal aspects of the auction, including any outstanding taxes or maintenance payments associated with the property.
  • Ensure that the terms and conditions outlined in the POS are understood and agreed upon.

5. Prepare Financially:

  • Ensure that you have the required deposit ready for the auction, typically in the form of a bank draft.
  • Bring additional funds to cover any hidden cost and potential top-up amounts required during the bidding process.
  • Explore financing options and assess your eligibility for mortgage loans to facilitate the property purchase process.

Thorough pre-auction preparation lays the foundation for a smooth and successful bidding experience, enabling you to make well-informed decisions and mitigate potential risks.



The Auction Process:


  • Physical Auctions
    • Arrive early at the auction venue to complete registration formalities and familiarize yourself with the bidding process.
    • Ensure you have the necessary documents and funds ready, and maintain a calm demeanor during the bidding process.
  • Online Auctions
    • If participating in an online auction, ensure you're registered on the designated auction portal and familiarize yourself with the platform's interface and bidding procedures.
    • Maintain a strategic approach to bidding, staying within your budgetary limits and monitoring bidding activity closely.


  • Set a Budget
    • Bid strategically within your budget, considering the reserve price and your financial limits.
    • Be mindful of competing bids and avoid overbidding beyond your predetermined budget.
    • Consider factors such as the property's market value, renovation costs (if any), and potential for rental income or resale.


  • Review Documents Thoroughly
    • If your bid is successful, ensure that all documentation is completed accurately and promptly to secure the property.
    • Carefully review the Contract of Sale or Proclamation of Sale (POS) to understand the terms and conditions of the purchase.
  • Seek Legal Advice
    • If you're uncertain about any aspect of the contract or documentation, don't hesitate to seek legal advice. 


  • Payment Schedule Compliance
    • Pay the remaining balance of the purchase price within the specified timeframe, typically 90 to 120 days from the auction date.
    • Adhere to the payment schedule to avoid penalties or forfeiture of the deposit.
  • Maintain Communication
    • Maintain open communication with the auction house, seller, and relevant parties throughout the payment process.
    • Address any queries or concerns promptly and proactively to avoid misunderstandings or delays.
By following these detailed process and tips for auction, you can navigate the final stages of the property auction process with confidence and ensure a smooth and successful transaction.


Property auctions in Malaysia offer unique opportunities for investors and homebuyers to acquire real estate assets at potentially favorable prices. However, success in the auction market requires meticulous preparation, informed decision-making, and adherence to legal and regulatory guidelines. By following the step-by-step guide outlined above and seeking professional advice where necessary, you can navigate the auction process effectively and capitalize on lucrative investment opportunities in Malaysia's dynamic real estate market. Happy bidding!


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