There are all kinds of properties on the market that are forcibly executed, whether we are talking about movable or immovable property, and there are opportunities that you can buy at a lower price than those practiced on the market.
Although the following information may be useful for other types of foreclosures, we will focus on real estate, in order to help you better understand how it works and what are the advantages and challenges of such an approach.
Where do you find out about auctions?
Here, things are not complicated at all. A simple “foreclosure” search on Google will return many results, from sites that specialize in the field, such as the National Union of Bailiffs in Romania (UNEJR), to real estate sites and to dedicated sections of banks.
Some auction ads appear in several places, especially in enforcement sites, with a much wider range of ads, while banks each publish their bids.
From these ads you can find out what goods are being auctioned, what are the listed prices, the characteristics of the properties auctioned, you can even find out the name of the bidder and how many days are left until the auction.
How can you participate in the auction?
Step I – information stage
Once you’ve “looked” at a property you want to buy, you need to find out the date, time, and place of the auction, the deadline for submitting the bid guarantee, and the deposit account. You will usually need to request this information from the bidder or the person who owns the property in your portfolio. Without exception, the contact details for each property are published, so you are only a phone or email away from this information.
Step II – depositing the guarantee
After you have passed the information stage, you must deposit 10% of the price indicated in the ad, in order to register for participation.
You don’t have to worry, you will get this money back if you don’t win the auction.
Step III – Submission of the written offer
After you have passed step II, you must submit a written offer to purchase the property for which you want to bid. It will be deposited at the headquarters of the executor who will deal with the sale of that property.
Documents that you must present to the executor
It could be considered Step III and a half. The set of documents required varies depending on the quality of your bid. The following documents are required for presentation at the auction meeting.
Individuals need:
- Proof of security
- The written offer to buy the property for which it is bidding
- Copy and original identity documents
If the applicant wants to send someone else to the auction in his place, the agent needs a power of attorney authenticated by a notary, otherwise, he cannot represent the buyer at the auction.
Legal entities need:
- Proof of security
- The written offer to buy the property for which it is bidding
- Company representatives need a copy of the company’s registration certificate
- Evidence from the Trade Register that the company is active and insolvent
- In the case of joint-stock companies, if the value of the asset in question exceeds 50% of the share capital, the GM’s decision approving the participation in the auction is also required.
- The representative also needs the mandate to participate in the auction, to be issued by the company
- The representative must also present the identity documents
Step IV – participation in the auction
From now on, things are simpler, because you will be guided by the bidders, who will take care of the respective stages of the auction. The winner is announced after the highest bid is validated by three calls and no one else comes up with another higher bid.
Can you be sure that you will get a much lower price than the one on the market?
Honestly, no one guarantees this 100%. Usually, the first auction, it starts from the price set by evaluation. At this stage, if someone wants to buy a property, the price may be even higher than the one practiced on the free market, but it must be taken into account that many participants will also try to pay as little as possible. of situations. So you don’t have to feel discouraged.
Things are getting more attractive at the second auction. If the property is not sold in the first auction, a new round will be held, in which the price will decrease by 25%, so the property will be sold at 75% of the initial value.
Careful! Banks that have the executed well in their portfolio can also participate in the auction. If the largest offer is not to the liking of the bank, it can also intervene to bid for the respective property. He can buy it, then put it up for sale trying to get a better price.
What’s next for the auction? Do you become an owner immediately?
Not! The winner of the auction has 30 days to pay the amount to the bailiff’s account.
After full payment of the price offered in the auction, the bailiff will draw up an award deed which he will hand over to the winner and which will serve as the title deed. This document will have to be registered by the successful bidder in the land book.
At the same time, the executor will automatically order and send the award deed to the Land Book for tabulation. After tabulation, the winner of the auction can dispose of the property purchased following the auction.
Potential headaches that may occur post-auction
The first issue may be a possible appeal. Within one month from the date of registration of the adjudication in the land book, any person who proves an interest (I mentioned such a possible case below) will be able to attack the minutes of the tender by way of contesting the execution. The admission of such an appeal will lead to the annulment of the award act.
If there are no appeals, the most common problems occur if the tenants have not been evacuated from the building.
Until their evacuation, viewing the building becomes impossible. If you want to sell it immediately, in order to take advantage of the advantageous price obtained after the auction, it will be very difficult to bring potential buyers to present their property.
Another problem is that if the old tenants have maintenance arrears, and the owners’ association wants to repurchase the debts in court, the auction may become void. You will have to find compromise solutions in these cases.
If you are unlucky enough to come across some bad faith residents, there is a risk that they will leave a disaster behind, which could result in additional expenses for the rehabilitation of the property, which could completely cancel the gain obtained by obtaining property at a much better price after the auction.
All you can do to avoid such situations is to hope that you will come across people in good faith, who will not go after them with doors, windows, floors, or even plaster on the walls.
But you should not look at them with pessimism, it is not a rule. In addition, if the building is a plot of land, or an office building, or a commercial space, the risks of complications are certainly much lower.
