Are auctions really cheap
Foreclosure auction: real estate under the hammer
Why are there foreclosures?
Basically, a foreclosure auction is a painful affair, primarily of course for the former homeowner. If they have high debts, a foreclosure auction, which can be ordered without the consent of the owner, is sometimes the last option to collect outstanding payments or to satisfy creditors.
The official directory for foreclosures can be found here.
Which properties are being auctioned where?
Most of the time, residential properties are auctioned, but commercial properties, especially restaurants and workshops, are also sold. In the case of residential properties, these are often old buildings in the country that are in need of renovation. Foreclosures are comparatively rare in the cities, which is due to the fact that the properties can easily be offered on the open market due to the high demand. Most of the objects are auctioned in Lower Austria, followed by Styria and Carinthia.
Real estate bargains thanks to foreclosure?
You should be realistic: Foreclosures are no longer an insider tip. Especially if the property is in good condition, the auction sums are often only slightly below the average purchase prices in the respective region. In view of the fees to be paid and the large selection that is available for the auction object, it is also not always worthwhile to buy a foreclosure object or to wait for it. There are around 2200 auction dates in Austria each year where you can try your luck. It is important to proceed carefully and step by step.
Step 1: Search and find auction objects
If you are thinking of buying a house from a bankrupt estate, the Department of Justice's edict file will give you a comprehensive overview of all of the objects in question. Simply select the desired property type and location when searching and the results will be displayed to you. Many of the properties are described in great detail and are even supplemented with photos. The auctions of larger properties and commercial properties are often also announced in the property sections of the local daily newspapers.
A viewing appointment (required by law) is offered to those interested. But be careful: Often it is just a single appointment! If you don't have time on the day in question, you shouldn't let yourself be carried away by buying the pig in a poke later, because real estate in need of renovation or unfinished property is often auctioned in foreclosures, which is why it is particularly important to work out exactly how much Real estate may cost and how much still needs to be invested. In addition, you should use the viewing appointment to get more detailed information about the operating bank, outstanding claims and land register debts. Also clarify whether there are rights of residence or rights of way. These often reduce the value of a property and must be taken over in any case, as these are permanent rights.
Step 2: What to bring to the auction date
The day of the auction is also written out in the edict file. All bidders are required to bring valid photo ID. The bids may only be submitted orally. If you cannot appear in person, you must provide your representation with a notarized power of attorney. In general, a minimum offer is set for each property, which covers half of the estimated value. Before you can bid, you must provide the court with a security deposit, a so-called vadium. This is done in the form of a savings book (cash is not accepted) and amounts to 10 percent of the estimated value.
It is best to take a leisurely look at an auction first. This will give you a feeling for the processes and the course of an auction.
Step 3: Know the auction process and behave correctly
First of all: take a deep breath! Under no circumstances should you fall into a bidding frenzy. Set a maximum amount that you will not exceed. It is an advantage if your selected maximum amount is slightly above a round amount. Round sums are a psychological barrier for many. To be on the safe side, do not bid right from the start, because you only arouse competitive thinking in your fellow campaigners, which in the worst case drives the price up. It can also be helpful to bring someone with you who can prevent you from making hasty decisions.
What additional costs are there?
- Notary fees
- Real estate transfer tax
- five percent agency fee
- Financing costs for loans
- possibly: land charges and mortgages that are taken over as part of the auction
Step 4: get the bid! And now?
If the hammer falls on "three" and you made the last bid, it does not mean that you are automatically the new owner of the foreclosure property. First of all, the creditors still have to agree. It is also possible that in the event that the auction price is too low (below three quarters of the estimated value), your bid can still be outbid for the next 14 days, after which you can also correct your bid. If this is not the case and none of the creditors veto, the property is yours. The ten percent security deposit is kept as a deposit and a distribution date is given, which is usually two months later and to which all creditors are invited. Here they can find out how much they actually get. The new owner must have paid for the property by this date. Only then does the district court ask for the new owner to be entered in the land register.
If you have won the bid at an auction, but change your mind, you can withdraw from the offer within the bid period of two months. The guarantee of ten percent, which is to be paid immediately after the award, is then not given back.
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