Can you still take the plunge and buy a home of your own through an auction? If you win the bid for less than the appraised value, does that mean you got a good deal? Together with Lee Ju-hyun, an expert committee member at GG Auction, we cover what first-time auction participants in their 20s and 30s need to know, from basic auction terminology and how to compare a property with current market prices to auction balance loans and proxy bidding. Can you still take the plunge and buy a home of your own through an auction? If you win the bid for less than the appraised value, does that mean you got a good deal? Together with Lee Ju-hyun, an expert committee member at GG Auction, we cover what first-time auction participants in their 20s and 30s need to know, from basic auction terminology and how to compare a property with current market prices to auction balance loans and proxy bidding. [Financial News] Amid rising home prices and jeonse rents, young people hurrying to buy homes of their own are heading to court auction halls. Since it is difficult to find the home they want in the regular housing market because of lending restrictions and a lack of funds, they are seeking to buy one at even slightly lower prices.
On the 29th, according to the Court Registry Information Plaza, people in their 30s accounted for the largest share—about 35% (520 people)—of those who bought collective buildings in Seoul through voluntary auctions from January to September this year. GG Auction expert Lee Ju-hyun shared key auction strategies for real buyers in their 20s and 30s on Financial News’ YouTube channel, “Jip Nawa-ra Ttukttak.”
First, Lee said, “Buying demand for ultra-high-end complexes has weakened amid tax uncertainty, but actual buyers are flocking to apartments priced at 1.5 billion won or less, where access to loans is relatively easier.” In fact, the average winning-bid-to-appraisal ratio for Seoul apartments last month was 94.7%, its lowest in a year and seven months, seemingly pointing to a slight cooling. But conditions vary by area. While the ultra-high-end market in the Gangnam area has slowed, mid- and lower-priced complexes costing 1.5 billion won or less in areas such as Nowon and Gangbuk are seeing winning-bid ratios exceed 100%, in a clear sign of polarization.
Can you still take the plunge and buy a home of your own through an auction? If you win the bid for less than the appraised value, does that mean you got a good deal? Together with Lee Ju-hyun, an expert committee member at GG Auction, we cover what first-time auction participants in their 20s and 30s need to know, from basic auction terminology and how to compare a property with current market prices to auction balance loans and proxy bidding. Lee said, “The biggest advantage of auctions is that you can buy a home below market value.” He added, “In a rising market, when there aren’t many properties for sale, asking prices become the benchmark. If you can buy below asking prices that are surging, that’s meaningful.”
Another advantage is that even homes in land transaction permit zones do not require land transaction permission to be purchased at auction. However, as in ordinary home sales, there are also numerous lending restrictions to be aware of. Lee pointed out, “Because an auction balance loan is also a type of mortgage loan, financial-sector lending limits—including the loan-to-value ratio (LTV) and total debt service ratio (DSR)—apply in the same way.” He added, “There are quite a few cases where people win a bid but cannot pay the balance because they receive less in loans than they expected.”
Can you still take the plunge and buy a home of your own through an auction? If you win the bid for less than the appraised value, does that mean you got a good deal? Together with Lee Ju-hyun, an expert committee member at GG Auction, we cover what first-time auction participants in their 20s and 30s need to know, from basic auction terminology and how to compare a property with current market prices to auction balance loans and proxy bidding. In particular, when taking out an auction balance loan, the “maximum 600 million won” cap and the requirement to move in within six months apply, just as they do to ordinary mortgage loans, so it is important to plan finances thoroughly in advance. Lee also advised, “Conditions such as the ‘occupant move-out requirement’ attached to policy loans like Didimdol and Bogeumjari can pose a significant hurdle for auction winners. You should carefully check the conditions with financial institutions or the Korea Housing Finance Corporation (KHFC) before proceeding.”
Salaried workers, including those just starting their careers, may find it burdensome to take a weekday off to visit an auction court, but they can use proxy bidding, Lee explained. Lee stressed, “If you have completed thorough legal due diligence and market research, using proxy bidding to broaden your opportunities to buy a home of your own is also a good strategy.”
[email protected] Jeon Min-kyung Reporter
