Cheap objects from foreclosures

0 Comments


Cheap objects from foreclosures

Around 100,000 properties are foreclosed in Germany every year. This is a good opportunity to buy real estate cheaply. One to two family houses often come under the hammer for 70 to 85 percent of the market value. Condominiums can sometimes be had for 50 to 70 percent of the market value. Foreclosures are complex.

Therefore, use the following tips:

1. Get as much information as possible about the property

Before the auction you should find out exactly about the object and its condition, as liability for defects is excluded. The real estate is auctioned in its actual state – even if it differs from the description in the land register.

Sources of Information You Should Use

Auction act

The auction file contains the expert opinion with the following information:

  • Description of the property’s condition, created by a qualified appraiser
  • The market value of the property as determined by the appraiser
  • Information on yields, construction defects and damage

Land register extract

Here you will find, for example, information on permanent housing rights or rights of way of third parties as well as land charges, mortgages and other encumbrances. The land register extract is usually also included in the auction file.

2. Clarify how the property is currently being used

If the previous owner lives in the property himself, you can apply for an enforceable copy of the award decision and thus have the apartment vacated. If the property is rented, you have a special right of termination, which expires if you do not exercise it in due time. However, this only applies to “justified interests”, that is to say usually to personal use.

3. Visit the property

Try to view the property. Take a builder with you. If you are not allowed to enter the property, you can try to get information from the neighbors.

4. Contact the main creditor

Try to find out what amount he expects at the auction – but without disclosing your own limit.

5. Clarify the real estate financing before the auction date

Since you will become the owner of the property in the event of a bid, you should arrange the property financing in advance. You also have to take into account that you have to show a ten percent deposit at the auction date.

What can count as security

  • Confirmed federal or state central bank checks, the presentation period of which may not expire before the fourth day after the auction
  • Bank clearing checks from a credit institution approved by the European Central Bank
  • Unconditional, unlimited and absolute bank guarantee from a bank that is also allowed to issue crossed checks
  • Transfer to an account of the court treasury before the auction date

6. Consider any additional costs when purchasing

In addition to the purchase price, as with any property acquisition, land registry costs and land transfer tax apply. In addition, the competent local court charges a surcharge of approx. 0.5 percent of the bid (highest bid). This means that the ancillary costs when buying from a foreclosure auction are cheaper than when buying a conventional property.

7. Attend some auction dates as a spectator

This gives you a feeling for the process and allows you to develop your own bidding strategy.

8. Prepare well for the auction date

  • Make sure you remember your ID card and your security deposit.
  • Set a limit for yourself and take an innocent person to hold you back if necessary.
  • A later exchange or complaint is not possible.

Related Post