Auction properties attract both first-time home buyers and investors, because the starting price is often clearly below the market price. But a low price has its reasons. The property is sold as-is, no seller stands behind defects, you sometimes cannot see the inside, and the debtor or a tenant may still be living there. These risks do not disappear when the gavel falls. They pass to the buyer.
This guide explains how buying auction property works, what to check before paying the deposit, and the problems buyers commonly meet after winning.
This is general information. The terms of each sale are in that sale's notice, and may change with the regulations in force at the time. Check with a lawyer before you bid.
Where auction properties come from
When a creditor wins a case and the debtor does not pay, the creditor asks the enforcement officer to seize the debtor's property and sell it at auction. The proceeds are applied to the debts in the order the law sets. Most of the properties in the notices are therefore houses and land that banks have seized over mortgage debt, and condominium units seized by other creditors.
Because the property comes out of a court case, the buyer is not buying from a willing owner, and nobody vouches for the condition of the property.
Step 1: Read the sale notice in full
The sale notice is the most important document. What you need to find is:
- Mortgage-free or subject to the mortgage. If it is subject to the mortgage, the buyer takes on the existing mortgage. An apparently cheap price must be added to the mortgage debt before you compare it with anything.
- Occupants and tenants. Some notices state that the property is occupied or that there is a lease.
- Terms for the deposit and for payment. This includes the deadline for paying the balance.
- Starting price and sale dates. The starting price is often reduced at the next session if the property does not sell.
Step 2: Check the property for what the notice does not say
- The title deed and the register. Check other encumbrances, such as easements, usufruct rights, or a registered lease.
- Access. Landlocked land is cheap but hard to use.
- City planning and land-use restrictions. Especially if you are buying to build or to run a business.
- The condition of the property from the outside, and the neighbours, who often know who lives in the house and how long it has been empty.
For more on title deed issues, see the guide to land and title deed disputes
Step 3: Unpaid common fees, the hidden cost
Condominium units and houses in housing estates that have been seized often carry long-unpaid common fees, because the former owner stopped paying everything when the trouble started. Transferring a condominium unit requires a debt-free certificate from the juristic person, and housing estates also have measures to suspend registration where fees are in arrears. The buyer therefore needs to know before bidding how much is owed and who bears it, so that the price they bid already includes this cost.
If you are the juristic person owed the common fees, read the guide to unpaid common fees for that side.
Step 4: Set your maximum price before you enter the auction room
The maximum price you should bid is not the market price less the discount you want. It is the market price less every cost that follows: the mortgage debt if the sale is subject to the mortgage, unpaid common fees, repairs, transfer fees and taxes, the cost of eviction proceedings, and the time during which the property cannot be used. A buyer who has not worked this number out in advance tends to overbid in the room.
Step 5: After winning the auction
Pay the balance within the deadline. If you plan to use a bank loan, get a preliminary answer from the bank before the auction, because if you cannot pay, the deposit is usually forfeited and you may be liable for the difference if a re-sale achieves a lower price.
Objections to the sale. The debtor or an interested party may file an objection or ask for the sale to be set aside, which delays the transfer. The buyer should allow time for this.
Transfer of ownership. Once payment is complete and there is no obstacle, the enforcement officer arranges for the transfer to be registered at the Land Office.
Step 6: If someone is still living in the property
- The debtor or dependants. The buyer can apply to the court in the original case for an eviction order, with no need to sue again.
- A tenant or someone claiming a right of their own. Separate proceedings may be needed, and some types of lease may bind the buyer.
- Negotiation. Agreeing that the occupant leaves by a set date, with a moving allowance, can sometimes be faster and cheaper than enforcement.
Do not enter to remove belongings or change the locks yourself, even once you have ownership. Removing people has to go through the court process.
How we can help
We check the property before the auction for Thai and foreign buyers alike, covering the sale notice, the title deed, encumbrances, unpaid common fees and occupants, and we can handle the matter after the auction through to receiving the transfer and evicting anyone still in the property. See the details of our auction property purchase service.
If there is a property you are interested in, send us the sale notice before the auction date. We will tell you what risks that property carries, and what the real costs are beyond the bid price.
