Distressed properties sold via private treaty as auctions remain no-go
Seven such properties sold by Edmund Tie in Q2 saw discounts of up to 32%
Mon, Jul 27, 2020
Siow Li Sen
https://www.businesstimes.com.sg/rea...s-remain-no-go
PROPERTY auctions remain no-go but that has not stopped auctioneer Joy Tan.
During the two months of the circuit breaker (CB), Ms Tan, Edmund Tie's head of auction and sales, managed to dispose of seven distressed properties totalling S$10.6 million via private treaty.
She is now busy planning to host a webinar next week to showcase more such real estate to keen investors.
During the April 7 to June 1 CB period, only essential services were allowed. But even as more restrictions have eased as economic activity picks up, auctions are still not allowed, given the rule that gatherings of more than five persons should not take place.
Since the circuit breaker, banks have generally put on hold their repossession activities as the courts were not open. As such there were few new mortgagee listings for Q2 2020.
More importantly, homeowners have been granted mortgage relief through the end of the year.
"We believe foreclosures will only pick up again after that should the economic climate remain weak and there is no relief extension," said Ms Tan.
But there were some private treaty sales in Q2 2020 arising from its auction listings in Q1 2020 or earlier, she said.
While property listings at auctions generally are mortgagee or bank sales, there are also owner listings, though the latter are typically financially wobbly by the time they contact the auctioneer.
"We have had instances where motivated sellers, either on their own or encouraged by the mortgagor, have already exhausted the traditional means of selling through normal associate agents and turn to us for assistance," said Ms Tan.
Through a fresh and differentiated marketing strategy, auctions reach out to a bigger market, resulting in positive outcomes, she said.
In addition, some sellers who have already committed a second property and are not willing to pay the additional buyers stamp duty will also list the property for private treaty sale, hoping to have a quick sale, said Ms Tan.
Private treaty is the normal mode of sale, where the buyers and sellers agree on the pricing and the terms of the contract are subject to negotiation; the option to purchase is issued with the exchange of one per cent option money.
The seven properties sold in Q2 saw discounts of up to 32 per cent from the guide price. An industrial factory with a 28-year lease in Tuas Avenue 4 sold for S$3.7 million, 32 per cent lower than the S$5 million guide price.
A two-bedroom Marina Bay Residences unit closed at S$1.95 million, a discount of S$100,000 or almost 5 per cent from the S$2.05 million guide price.
"Our guide prices are still slightly negotiable, subject to the seller's or bank's agreement," said Ms Tan.
It has been quite hard to get buyers during Covid-19, and prices could fall further, so sellers were inclined to accept the lower offers, she said.
Buyers are mostly locals who have probably been waiting for a good time to enter the market, and seized the opportunity of the muted market during the CB period, she said.
Ms Tan is also getting more enquiries from China and Hong Kong, as seen from the registrations for next week's webinar.
So far there are over 50 registrations, with overseas buyers making up a good proportion.
The July 29 webinar will showcase 12 to 15 properties, and a mixture of banks' and owners' sales.
Some of the properties include a bungalow on Sentosa's Coral Island, and two penthhouses in the Helios Residences.
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