Buying a house in a bid is another way out to be able to access a home at a good price. In addition, according to the experts, it constitutes a great investment opportunity since the amounts are low and allows obtaining good returns. If you consider it as an option to get a flat, in this article we show you how to bid in an online auction, whose main advantage is its price. But we also point out the main drawbacks, among which it stands out that the possible charges that the property may have passed to the new owner.
Buying a house at auction, unbeatable prices
The price of housing could fall 4% in 2020 and 5% in 2021, according to the latest Bankinter Real Estate Report. If you want to get a cheap house, you can wait for the prices to drop. But you can also explore other options, such as going to a home auction, which can also be done online.
Although Internet auctions have greatly facilitated participation, they are still a very minor way of acquiring real estate, acknowledges Héctor Arderius, manager of Subastanomics. But it is done. Why do you buy houses at an auction? The reason is very simple: they are much cheaper. And, if you want to invest, “it is an excellent way because the award prices are very worthwhile and allow obtaining very good returns”, explains the expert. And it is that the minimum saving in an auction is 30%. But “sometimes it can be much higher” and, although it is not very frequent, sometimes there are real bargains.
Can anyone participate or are there requirements?
To buy a home at auction no special requirement, and one can participate in anyone without legal impediments. In which cases could it not be possible? For example, officials directly related to the judicial file of a property cannot take part. Likewise, it should be borne in mind that to participate you must make a deposit, which is usually around 5% of the value of the chosen house.
What types of homes are auctioned online?
There are no restrictions on the type of property that can be auctioned: flats, chalets, townhouses… any home can be sold at a bid. And, of course, you can also bid on other types of property such as plots, premises, offices, etc.
How do online auctions work?
Home auctions are regulated by Royal Decree 1373/2009 . In addition, since October 15, 2015 (by law 19/2015 ) judicial auctions are held online.
Is it easy to participate in an online bid? How to do it? The operation couldn’t be easier, as Arderius assures us. Just follow these steps:
- Register in the BOE Auction Portal.
- Once there, see the auctions that are active and filter the ones that may interest us.
- After studying them well and with knowledge of the facts, you choose the appropriate auction and participate.
- Make the deposit and start bidding. The deposit is usually 5% of the value of the property, and if the bid does not win, it is returned.
- Whoever bids the highest wins.
⚠️ Important! Keep in mind that participating in home auctions is very easy, “if you know exactly what you are doing, what you are looking for, and what features an auction must have to be suitable for consumption without great risks”, admits the real estate expert. You have to be trained and know what to do … “but if you do, the process couldn’t be easier.”
Advantages and disadvantages of bidding online for a home
What are the pros and cons of buying a house at an auction? In the expert’s opinion, “the only advantage is the price savings “.
Regarding the drawbacks, the following stand out:
- The main one is that buying a flat at auction “the bidder is subrogating himself in everything that has been carried out in the judicial file.” In other words, all the burdens on the house pass to the new owner. For this reason, it is essential to try to visit the property that is going up for auction before participating, in order to check its real condition.
- The home may be in poor condition.
- There may be tenants (or squatters ), so it is advisable to investigate as much as possible.
- Keep in mind that the offer is limited.
How to avoid a mortgage default?
The loss of the home or eviction starts with the non-payment of the mortgage. Given that it is not always possible to foresee the financial future, this article explains the ways that exist to avoid an eviction and the foreclosure process: from notifying the bank of the non-payment and requesting an extension of the payments, to requesting a deficiency or demand a debt restructuring.
What is the eviction process like?
Foreclosure is a process that can take years. These are its phases.
- 1. Notice of non-payment: 15 days after the first non-payment, the bank will contact the client to notify the irregularity.
- 2. Official statement: one month after the first non-payment, the entity officially notifies the situation.
- 3. Entry into default: after five months of non-payment, the debtor is included in lists of defaulters such as ASNEF or RAI.
- 4. Lawsuit: as of the sixth month, the bank transfers the request to begin the foreclosure to the courts.
- 5. Registry of charges on the property: the Property Registry is notified of the existence of charges on the home.
- 6. Announcement of the auction: the date on which the house will go on sale is published on the notice board of the town hall in question, in the Registry and in the court. It is recommended to be attentive because there is no obligation to notify the affected party of this fact.
- 7. Holding the auction: bids are compared and a buyer is awarded. If no offer exceeds a certain minimum, the bank can acquire the property at 60% of its value. This is when homeownership is lost.
- 8. Eviction or release: the debtor is urged to leave the house. The court will set the date and time and will appear accompanied by a locksmith and the police, if necessary.
How to avoid eviction?
When the risk of non-payment is very high (if the job is lost or the end of the month is reached and an unavoidable expense occurs), the change of circumstance can be communicated immediately to the credit institution. First, because this attests that the person takes responsibility for their commitment and, later because it is possible to reach some kind of agreement. These are the strategies that must be agreed upon with the bank.
1. Extension of term
It is most likely the best way to lower the monthly fee. If the term of the credit is extended, you have more time to repay the debt, so the payments will be lower. This increases the total cost of the mortgage loan.
2. Request a leave
It is not surprising that mortgage contracts include the right to use what is known as a total or partial grace period. By means of this technique, part of the monthly payment to the bank is avoided, limiting the payment to the part corresponding to the interest or even the entire monthly payment. extend the return over time, but it will allow you not to leave any fee unpaid and avoid late fees.
3. Debt restructuring
One of the common reasons people fail to pay their mortgage is because they have accumulated excessive debt and it is impossible to meet all the payments. At this point, there are private equity companies that allow all the debts to be combined into one, resulting in more affordable installments. Now, this service has a cost that will tie the debt for a long time, in addition to having a great risk: If you miss a payment, you run the risk of losing everything. This should be considered a last resort.
4. Dation in payment
The famous dation in payment consists of handing over the home in exchange for canceling the debt owed to the bank. This will only be possible if the dation is present in the mortgage contract or if a series of requirements are met:
- 1. The entity must have registered in the code of good banking practices.
- 2. All relatives of the debtor must be unemployed.
- 3. Must be the only home owned.
- 4. The amount of the home must not exceed 200,000 euros.
- 5. The mortgage must not have any guarantor.
- 6. The foreclosure process must not have started.
- 7. The house cannot be taxed with subsequent charges.