Housing auction to be held today

"Bidders will have to arrive at bidding prices independently, which requires professional appraisal skills."

Chen Chen, chairman of Taipei Real Estate Appraisal Consultant Association

On behalf of the Taipei District Court, Taiwan Financial Asset Service Corp (TFASC, 台灣金服) is scheduled to kick off its first auction this afternoon in an effort to liquidate collateral from local banks' non-performing loans.

But pundits said that potential buyers may take a wait-and-see approach, hoping for better bargains during the second or third auction rounds.

"As an impartial third party, the company will hold auctions -- similar to court auctions -- on Tuesdays and Thursdays. [Today's] auction will showcase some 20 units in Taipei with a total value of over NT$200 million," the company's executive vice president Louis Lu (陸俊雄) told the Taipei Times yesterday.

Commissioned by the court, TFASC plans to sell off its first batch of 300 units by the year's end, Lu said.

The asking prices, at today's auction, range between NT$2 million to NT$63 million for home units mostly located in greater Taipei area.

At the start of the auction, between 2:30pm and 3pm, potential buyers will seal their bids, along with a check worth of 20 percent of the asking price, as a deposit. Auctioneers will then announce the winners at 3pm.

Winners will be required to pay the remaining 80 percent within a week before property ownership is officially transferred to them.

To provide finance, Lu said that the Grand Commercial Bank (萬通銀行) and Union Bank (聯邦銀行) have agreed to provide home loans to bid winners.

Within another 15 to 20 days, a second or third round of auctions may be held to re-sell deals that fail to be closed after the first auction, with a 20 percent reduction in prices after each round, Lu said.

As the general public expects home prices at auctions to be lower than market prices, Victor Chang (張欣民), a manager with Sinyi Real Estate Inc (信義房屋) said that few buyers are likely to place bids today.

"The auction's asking prices are still a little bit too high," Chang said.

Buyers a likely to wait for the 20 percent price reduction in the second round or the 36 percent reduction in the third round of the auction, he said.

Chen Chen (陳諶), chairman of Taipei Real Estate Appraisal Consultant Association (北市房地產鑑價公會), said that court auctions usually attracted less enthusiastic buyers since there is no open bidding to stimulate buying competition.

"Bidders will have to arrive at bidding prices independently, which requires professional appraisal skills," Chen said.

Home buyers at the today's auction will have a hard time deciding on prices sufficient to close the deal, he said.

Both Chang and Chen, however, said that the company's quality housing units will be easy to sell, and both dismissed concerns that local property prices will be negatively impacted by the auctions.

"Unless shoppers suddenly flood in to buy houses [today], the impact will be minimal," Chen said. "Court auctions have existed for years."

As court auctions to sell houses only make up 2 percent of market shares, Lu agreed that the auction's impact on the local property market would be limited.