There are different reasons why a property is sold through an auction. If that property went through foreclosure and returned to the bank, the bank sells it through auction to effectively dispose of the property. There are also auctions administered by local governments, which occur when the owner does not pay his property taxes or in the bankruptcy of companies due to bankruptcy. In both cases, one can buy a property for much less than its value, which is one of the main advantages that these properties offer us:
- Better prices than in the market: The starting prices in an auction are usually below the properties sold by individuals/agencies, so it can be a good way to get a flat for buyers on a tighter budget.
- More options in houses, premises, apartments, etc .: We are faced with a wide portfolio of properties to choose from. Both the real estate boom and the economic crisis that our country has gone through in recent years have increased the supply of all kinds of real estate.
- Authentic negotiation: The auction sale allows us to participate in an authentic negotiation with the rest of the interested parties in a transparent and clean way, since at all times we know the bids that the auctioned good receives and the value of it.
- Fair Price: Buying our apartment or making our real estate investment through an auction, we make sure to get the property for the right price, since it ends up being awarded to the highest bidder after a transparent negotiation.
- From anywhere : If the auction is done online, the biggest advantage is that you do not have to be located at a specific time and place to be able to bid, but you can do it from anywhere in the world. All you need is a computer and even a mobile phone for these auctions to be within your reach.
And this is the only problem that this purchase format can pose us:
- No guarantees. When we buy a property by auction we buy it as is. That is, if when we get there we find some kind of problem such as humidity or renovations, the cost of this will be our responsibility. Therefore, you should consider the possibility that the house needs repairs and take this cost into account when making your offer.
Some tips that we always give to people who call us to participate in a property auction:
- The first thing to keep in mind is that, to participate in an auction, you have to leave a reserve that you have to have already saved and know how you are going to finance the rest if you are awarded, so get ahead of these procedures.
- You also have to know the “language” and vocabulary quite well to be able to bid : starting price, reserve price, award price, charges, administrative debts, maximum creditor, etc. They are not many but they are necessary to know the operation of this medium and take the steps firmly.
- Ask for all the necessary information to make sure you bid for the correct thing : photographs of the current state, appraisals, simple note, IBI, current and pending community expenses, deed model, plans, etc. The description of the property must be read carefully.
- If possible, it is advisable to visit the property that is going to be auctioned and check that its status is the one that has been sent to us, that there are no people living in it, etc.
Dare to Buy at Auction
For many people, the auction of a house or apartment represents an excellent opportunity to have an equity, although for others it can be a bad investment. Buying a property that is in the process of legal litigation can save your pocket around 20 to 50 percent of its real market value. However, you must inform yourself about the conditions of the house, and at what stage of the process the trial is, which could take years. Here we will tell you what a real estate auction is and if it is convenient to make a purchase with these special characteristics.
What is it about?
Generally speaking, a real estate auction is a legal dispute in which a judge orders the sale of a house at auction. The judge’s decision is the result of the breach of an obligation , for example, the default on the mortgage.
What do I need to participate?
If you are interested in participating in a real estate auction, you must pay 10 percent of the judicial appraisal of the property. Payment is made through a deposit ticket issued by the National Savings Bank and Financial Services ( Bansefi ) . Once you have the deposit ticket, you have to appear at the court at the time and date established in the legal system.
The auction of the property will begin with a previously established and published base figure. In the event there will be a bid between two or more interested in acquiring the property. If you are the one who offers the most for the good, the judge will set a payday and bank account to deposit for the acquisition of the property and its deed.
The law establishes that a property in auction has three sale options
Almoneda: The word is used as a synonym for public sale or auction. In a real estate auction, it is used to indicate the number of times the property has been for sale, usually only three times.
1. In the first Almoneda, it is auctioned at 2/3 of its value.
2. If the sale is not finalized in the first stage, a second Almoneda is made 45 days later. In this second auction, the price is lowered to an additional 20 percent.
3. If there are no bidders to offer capital in the auction, it goes to a third Almoneda, here the property is auctioned at the price that the bidders manage to offer, as long as it is higher than the amount of the debt.
- Value: According to specialists, buying a house at auction can represent between 30 and 50 percent less than its value.
- Investment: because it is a property that will be purchased at a price well below its real value in the market , after completing the purchase, regularizing the papers and debts of the property and reviewing its state of conservation, you can put the property up for sale. property.
- Uncertainty: when you buy a property at auction, you acquire the property as is.
- Immediate payment: if the capital you offered was sufficient and you win the auction, you are committed to paying the full cost.
- Before considering the purchase of the deposit ticket, we recommend that you inform yourself about the status of the litigation and visit the house you want to buy , you can probably only see it from the outside, since they are usually occupied.
- Lean on a specialized manager and / or a professional in the real estate sector to help you with an analysis of the commercial value of the house and consider whether the investment will be good.