When someone is looking for a new home there are two main criteria: that the property suits their needs and that it fits within their budget. Depending on your own needs, finding a property that can meet them might be relatively easy, but the economic side of things is often more complicated, especially in times when housing prices continue to rise .
This is why real estate auctions have become one of the best ways to acquire property at a price below the market value. A judicial auction is the consequence of a procedure in which the plaintiff asks a court to collect a debt by auctioning off their assets. It is possible to auction any property that is mortgaged or seized and linked to a debt that is claimed through the courts, meaning that this is a way to acquire almost any type of property: a flat, a plot of land, an office, a garage, or a commercial premises, among others.
Requirements to participate in a real estate auction
In order to acquire properties at auctions, a series of considerations and requirements must be taken into account. To be able to participate in a real estate auction you will have to enter and register in the public portal of the State Agency of the Official State Gazette.
Freehand face-to-face bids are a thing of the past, which is why all of them currently take place over the internet. It is in the aforementioned Auction Portal of the State Agency where you can consult the available properties, as well as bid for them.
To be able to participate in the real estate auctions, you only have to be a natural or legal person, there is no other type of requirement. What's more, no other kind of limitation can be imposed on you.
Just by signing up you will have access to see all the auctions that are in Spain. From the moment they are published, there is a period of 20 days in which it is possible to bid, in addition to being able to see if other bids have been made for a property and what is the highest amount.
Economic requirements
In order to place a bid, 5% of the starting price must be paid. When the auction concludes, if you are the highest bidder, you will be notified, with an established period to be able to pay the remaining amount in court.
Therefore, you will obviously also have to have the economic capacity to pay the final price. This amount can be paid in cash or through a mortgage or loan.
Likewise, you must be aware that, if you are awarded a home at auction, the corresponding taxes must be paid. This means having to pay the Patrimonial Transfer Tax (which can vary between 6 and 10% depending on the autonomous community); and the Tax on Documented Legal Acts (IAJD) (0.5%). Likewise, it will be necessary to settle the fees of the registrar and the notary.
Advantages of acquiring real estate at auctions
Participating in a property auction can have many advantages for the buyer, the most notable of which are highlighted here:
- Savings in the final price of the property: The final price of a property acquired through an auction can be between 30 and 50% lower than its value, with occasions when this percentage is even higher. In any case, you have to be attentive to the operation since it may not be profitable in some cases. It must be taken into account that the value considered is the appraisal value for auction purposes that is included in the mortgage deed, and this may be a higher price than the market value of the property.
- Less paperwork: Contrary to what happens with other methods of acquiring a property, in this case it is not necessary to carry out the appraisal of the home, since it will have already been appraised by the bank.
- Purchase financing: If you do not have cash to pay the final price within 20 days, you have the possibility of requesting a loan or mortgage to finance the operation.
Tips for participating in real estate auctions
More and more people are becoming aware of the advantages of acquiring property at auctions, although it is not easy to enter this world and get a property. The reason is that there are many professionals who bid for the best opportunities. In any case, to have the most options, it is advisable that you take into account the following tips:
- The first tip to keep in mind before participating in an auction is an obvious recommendation: you must have sufficient solvency to participate in it. You should know that, in addition to paying the deposit for the participation, if you are the final winner, you will have to pay the rest of the amount.
- Secondly, it is important that you are familiar with how judicial auctions work. This means knowing both the steps to follow and the language used in them. This will mean that you will be able to act appropriately and in a timely manner in the corresponding procedures.
- In accordance with the previous point, it is also necessary to get to know the judicial file, as well as all the information related to the property to be auctioned, in advance.
- It is recommended that, before starting a bid, you have a prepared strategy based on the economic means at your disposal. Regarding this point, both the character and the experience of each participant will be key to decision-making.
- Finally, it is recommended not to be disappointed in the event that you don't win your desired property. It is always possible to negotiate with the successful bidder or, failing that, to find another house that is up for auction and that may fit your needs and preferences.
Taking into account all the above, you will be in a position to acquire real estate at auctions, through which you will be able to get great opportunities, be it for yourself, or as an investment.
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