Buying a house at auction could be a real bargain. But what are the exact procedures to follow? How should you behave? What are the risks and benefits associated with this type of choice? Let’s find out!
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To buy auction house: more and more people choose this formula to buy the desired property. Participation in auctions is open to all and it is not essential to be present physically. Despite this, as is usually the case in business, even to buy a house by relying on auctions there are possible risks that you should always be aware of. Here, then, is that a series of advice on this it can be really useful to avoid making mistakes or finding ourselves in trouble.
It is important to know how to behave, what will be the possible advantages, the expenses to be incurred and, why not, how to participate in an auction. And then, we will also try to understand the reasons why a house can suffer this fate.
1. House auction, why does it happen?
What’s behind the sale of one auction house? Which ones are they the reasons who pushed towards such a drastic decision? These are the first questions to ask yourself when you start talking about judicial sales. It is never nice to have a property taken off and to know that it will end up at auction to heal complicated situations and important debts. Yet they are episodes more and more frequent! According to the latest Sogeea datain 2021 the real estate auctions in Italy had an increase, even, of 59.5% compared to the previous year. A real boom! And the trend is steadily increasing for 2022 and 2023 as well.
But why does a house end up at auction? The path that leads a property to a sale of this type is usually quite long and complex and can derive from 3 main reasons.
- The private individuals who bought it they have not paid the mortgage requested from the bank;
- companies have suffered a failure and their property is first foreclosed and then auctioned off;
- properties belonging to a public body they end up at auction because the only one who can sell them is the court.
All the houses that go to auction they end up on the sites of the territorially competent courts who provide to describe them, attaching a technical report, to set a date and time for the auction and to indicate the procedure to be followed for participation in the auction.
2. House at auction, who can buy and how?
There possibility of buying a house at auction is open to all. There is, however, one exception: the enforced debtorsor the original owners of the property, are excluded from this opportunity. The court sets the minimum price of the good and, during the auction, it is possible offer the amount that is deemed most suitable and, above all, suited to one’s possibilities. It will be the sales orders that will set the minimum increase amounts by which to relaunch an offer compared to the previous one.
There Law 132/2015 gave a stop to the auctions with enchantment foreseeing only the mode without enchantments to unfold both traditionally and electronically. Each offer must be submitted in a sealed envelope. Each will be open on the day of the auction but beware: it will not be who has offered the most to win. At the same time, in fact, there will be the possibility, for those who want it, to relaunch their offer, increasing it and trying, in this way, to win the house.
3. Visit an auction house
When a property ends up at auction, its description is published on the website of the court that will handle its sale. A question that often arises is the following: is It is possible to physically visit an auction house? The answer is simple and it is positive. To deal with these aspects are the judicial custodians to whom the property is entrusted and who will have to take care of showing it to the interested parties. A not insignificant possibility given that a house is an important and expensive asset, and it is essential to be able to visit it before deciding whether or not to participate in the auction. THE contacts of the judicial custodian they are always indicated on the court website in the card relating to the property in question.
4. House auction: is it possible to take advantage of the first home subsidy?
Buying a property is an important step and that of a house at auction is certainly no exception. We are well aware that the Italian government has several plans concessions for the first houses. But the question is one: can we use it even if we have bought our property at auction? Yes, it is possible! When we buy, therefore, we will be able to benefit from a reduction in terms of taxes. In this regard it is good to remember that it is it is necessary to make a request to the Revenue Agency of competence before the so-called transfer decree is registered.
This does not mean that the request cannot, however, take place subsequently. In this case, however, we will need a supplementary act and we may have to wait for a longer period of time..
In the case of purchase from a private seller we will pay a registration tax of 2%, a mortgage tax of 50 euros and a cadastral tax also of 50 euros. In case the seller is the manufacturer (and less than 5 years have passed since the completion of the works) we will pay 4% VAT, a registration tax, opotecaria and cadastral tax of 200 euros each.CopyAMP code
5. Mortgage for home purchase at auction
Among the many types of mortgages offered by the market, there is also one with which it is possible to proceed with the purchase of a house at auction. Is called mortgage auctions and is reserved, precisely, to those who buy a property through the judicial offices. It works like all other mortgages but it is good to pay close attention. You have to be sure of winning the auction since the request must be submitted before the award. Otherwise, the bureaucratic time necessary for credit institutions to disburse the loan, would make us lose the house awarded and the deposit paid to participate in the auction itself would be lost. Therefore, it is necessary to pay the utmost attention!
6. What are the costs of buying a house at auction?
We have already anticipated how the auction house falls within the types of properties for which it is possible to request the first home subsidy. There are, however, some important expenses to be incurred and of which it is good to be perfectly aware before participating in any auction. Let’s find out together:
- depositto be paid before the auction and which is equal to an amount included between 10 and 20% of the property’s value. If we do not win the auction, this amount will, of course, be returned to us;
- eventual amnesty urban or cadastral type (if the house does not have one);
- possible condo fees not remedied by the previous owner;
- expenses related to the transfer of ownershipi.e. release of energy certification, 16 euro stamp duty, registration in the Real Estate Registry, cancellation of registrations on the property, notary fees in case of mortgage).
A lot of things to keep up with so one of the best tips, in this case, is to let us be followed by an expert in the sector. In this way, we will avoid making mistakes!
7. Taxes to be paid to the State in Italy
Which ones are they the taxes to be paidinstead, to the state after being awarded a house at auction? The first thing to say is that these depend the type of seller: private or construction company. In the first case we will pay a registration tax of 9%, a mortgage tax of 50 euros and a fixed cadastral tax of 50 euros. If the seller is the construction company (and the sale falls within 5 years from the end of the works) we will pay a registration tax, a mortgage tax and a cadastral tax of 200 euros each. We will then have to add 22% VAT if we have won a luxury home (10% in other cases).
8. The risks of buying a house at auction
Now that we know better the auction house market, what are the risks that can be encountered when choosing this type of purchase? We have highlighted, in particular, 3.
- Exclusion from the auction judicial because something went wrong in compliance with the terms for participation;
- Not having sufficient funds to cover the purchase made within the terms set by the court;
- Possible opposition from third parties the award of the asset.
The advice that we feel like renewing and to which we have already referred is that of contact specialized personnel and let us assist you throughout the procedure so as not to take unnecessary risks.
9. Why it is worth buying a house at auction
We close with the most beautiful part ofbuy house at auction because, let’s face it, buy a property paying it much less than its market value is everyone’s dream. It is estimated that the decrease compared to standard prices is 40% although in many cases it can achieve a 50% lower cost. In the case of deserted auctions, then, prices drop even more and convenience increases. Once the good has been awarded, we can resell it at a higher price and, therefore, earn money immediately. Here because judicial auctions are increasingly popular since they are judged, especially by young couples who intend to start a family, the best solution to buy a house without spending a fortune.
Gallery ideas and photos of the house at auction
Did you find in our article all the information you needed to decide whether or not to buy a house at auction? Reiterating that this is a choice to be made with great care, we invite you to take a look at our photogallery where you will find a summary of all the points covered so far.