Citibank auctioned off 20 real-estate properties with a market value of NT$68 million on Saturday, liquidating collateral from its non-performing loans and realizing a return of NT$50 million.
"This is the quickest and most effective way to sell properties to would-be buyers. Within five minutes, one unit is easily sold," said Billy Yen (
Yen said that the company had held more than 10 auctions and helped banks write off their non-performing mortgages with an average of NT$200 million in returns per week.
Closing prices in Saturday's auction were, one average, 27 percent below market value while properties carrying the lowest asking price were as much as 56 percent below market value.
In addition, the lowest deal came in at NT$510,000 while the highest was NT$8.9 million. "Auction deals are usually closed at prices ranging between 10 percent to 15 percent above the lowest bid," Yen said.
He said the ratio of sold properties priced at around NT$1 million through auctions was 80 percent, while the ratio of sold properties priced above NT$2 million was 60 percent to 70 percent.
"The higher the price is, the less likely it will be sold at auction," Yen said.
With a record high of NT$1.64 trillion in non-performing loans in Taiwan, realtors have long expressed concerns that such auctions could have a negative effect on the property prices.
But Yen said that properties acquired by banks from home mortgage defaults would be put into realtors' hands for sale for a three-month period before any attempt at auctioning the property. As a result, unsold property is usually located in suburban areas or are of low quality.
Bidders seemed to be generally satisfied with their acquisitions on Saturday.
A shop keeper from northern Keelung, surnamed Ker (柯), said that he won with an NT$800,000 bid for a Taoyuan County apartment appraised at NT$1.3 million.
"It's not such a big bargain. But it can be rented out for NT$6,000 per month after making some repairs," Ker said.
Ker, however, lost on a bid for another unit in Keelung, which was appraised at NT$2.85 million. He had bid NT$2.03 million for the property. "That unit was a really a good bargain since it, along with the surrounding land, can eventually be re-sold for at least NT$2.5 million," Ker said.
He gave up placing bids because he said he realized that another bidder was more interested in acquiring the property.