Is a bank auction (lelong) shop lot worth buying?

A bank auction shop lot is worth buying only when two things are true: the location already has steady ground-floor demand, and the reserve price, after all extra costs, is clearly below what similar shops are asking on the same street. A low price alone is not a bargain. Auctions move fast, you usually buy the property as it stands, and pulling out after the hammer falls can cost you the deposit.

This is general information, not legal advice. Read the proclamation of sale with a lawyer before you bid.

When a borrower defaults, the lender can sell the property by public auction. Every auction has a notice called the proclamation of sale (POS, perisytiharan jualan). It sets out:

• The reserve price, the lowest price the property can be sold for.
• The deposit you must pay on the day, and in what form.
• The deadline to pay the balance.
• Who is responsible for outstanding charges and for getting vacant possession.
• Other conditions of sale.

The terms differ from case to case, so the POS for the specific shop is the document that matters. If no one bids, the property may be put up again at a later auction, sometimes at a lower reserve price.

• The seller is a lender that wants to recover a debt, not hold out for the top price.
• Buyers carry more risk, so fewer people bid.
• Some auction properties have problems: occupants, arrears or poor condition.

That last point is why the discount exists. Your job is to find out which kind of discount you are looking at.

Compare the reserve price with recent sale adverts for similar shops on the same street, not the hub average. Convert both to price per square foot with the psf calculator. Our shop for sale pages show the middle half of recent asking prices by size band (MCE analysis of recent portal adverts, Nov 2026: last 6 months, shop types only, bait and duplicate adverts removed, middle half of asking prices).

Then add the costs a normal purchase would also have:

• Stamp duty on the transfer: use the stamp duty calculator.
• Legal fees: the legal fee calculator follows the Solicitors' Remuneration Order 2023 scale.
• Any arrears the POS passes to the buyer.
• Repairs, and the cost and time of getting vacant possession.

If the gap against the market disappears after these, it is not a bargain.

More than ever. A cheap shop on a dead street stays cheap and empty. Use the same checks you would use for any shop: footfall, anchors on the row, parking, frontage and how many neighbouring units are vacant. Our 15-point location checklist works for auction shops too. If the shop already has a trading tenant, read tenanted or vacant shop lot to judge whether that tenant adds value.

• Get the POS and read every condition
• Lawyer's title search: tenure, restrictions, caveats
• Visit the shop and the street at different times of day
• Find out who is occupying the shop
• Compare psf with same-street sale adverts
• Budget stamp duty, legal fees, arrears and repairs
• Loan approval in principle and deposit ready
• Set your maximum bid in advance and stick to it

For more on buying, see the buyers guide.

Written by Tok Ginstee (REN 37505), CID Realtors Sdn Bhd (E (1) 1855). Updated November 2026.