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To buy or not to buy at Auction?

At MCCA we do not encourage our customers to participate in auctions. Our main reason behind this is the high-pressure competitive environment is definitely NOT ideal for allowing enthusiastic purchasers to make sound financial decisions regarding such a serious, long-term commitment. 

However, if you insist on attending an auction, please secure, at least, preliminary finance approval prior to attending an auction and be aware of these common auction ‘cons’:

  1. Problems with the property. (Asbestos, nearby power stations, HT power lines, or the existence of structure defects (Some things really are too good to be true!)
  2. Beware of dummy bidders. It is illegal to make a false bid, hinder another bidder, or intentionally disrupt an auction. However, with growing reports of such ‘tricks’ taking place at auctions despite recent government interventions, it is safe to say that quite a few auctioneers continue to conduct their business in a fairly questionable manner.
  3. The property is in fact quite exceptional and in high demand. In these cases the vendor’s agent will be pulling out every trick in the book in order to get prospective buyers bidding as high as possible. Remember, real estate agents receive their commissions from and work for the vendor- not a happy homebuyer.
  4. If the seller has agreed to consider pre-auction offers, you can make an offer through an agent prior to an auction. However, if your offer is accepted less than three clear business days prior to the auction date, the same conditions would apply as if you purchased the property at auction; for instance, you do not get a cooling-off period (time to reconsider your decision).
  5. If you are the successful bidder at auction; you will be offered a contract in the same terms that was on display before the auction.
  6. You cannot make the contract subject to any further conditions (for example, obtaining finance, satisfactory building inspection report or having a longer settlement period) unless the vendor agrees to them.

So remember, with auctions, it always pays to do your research and seek independent advice!

And with that, we’ll leave you with one final golden rule of home buying:

Go for the least attractive property on the best street and never seal the deal under pressure.

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An Introduction to Islamic Finance

A seminal book on Islamic finance by the world-renowned Mufti Taqi Usmani, this is a must-read for anyone interested in the key concepts, rules, and ideas behind modern Islamic finance.

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