Certainly, judicial auctions are not listed as an innovation of the 21st century, they have existed for a long time. What is more true is that, until it was modernized by means of the Internet, it was nothing more than a cluster of papers on a glazed cork at the courthouse door, locked …
I am pleased to write these words to announce that, today, we have optimal clarity, sharpness and regulation with regard to judicial auctions, incredible for anyone of the last century. Therefore I am preparing to express my humble opinion of the openness (in a matter of sharpness, essentially) of this investment path that is not negligible, open to all and only suitable for connoisseurs of the Civil Procedure Law.
We must have a series of clear concepts:
- Deposit of 5% to enter the auction and therefore enable bids to be made.
- Avaluation Value of the property.
- Minimum Bid 50% (second house) or 70% (residing home).
- Bid Reservation.
- Previous, subsequent and inherent charges to the property.
- Demand of cancellation of subsequent charges.
If we take into account the aforementioned, we can more or less summarise the steps to follow in a judicial auction:
- Study of the property once published in the BOE. For this we will have 20 calendar days in order to find out first hand, and through the property manager of the property, to find out the debts of the debtor with the community for the non-payment of fees (inherent charge). We must also find out the unpaid fees of IBI(an act that we cannot perform by ourselves) before the City Council of the corresponding locality where the property that interests us lies, does so. Therefore we will not have the necessary knowledge to know firsthand how much is owed from unpaid IBI´s fees. It is also not difficult to make an estimate, since they are fixed and annual fees with relatively low default increases.
- Once the inherent charges (aforementioned) have been ascertained, we will proceed to find out the other charges of the property through a Simple Note in the Property Registry. In that way we will know with certainty if the executor(who has requested execution because it is usually the first creditor) of the judicial auction is the first existing burden. If this were the case, there would be no reason to worry about the remaining charges (the subsequent charges), since they are eliminated by law once the auction is over.
- Proceed with the realization of bids within our capacities, limits or what we consider a maximum price in relation to our interest in said property. We will always have the option to make a position reservation, that is, in case a bidder with a better bid is removed, it will automatically bounce back to us if we are the next best bidder.
- In case of adjudication of the property for the simple fact of being the highest bidder, we pay the remaining amount between the amount of the deposit and our maximum bid. In case of not winning, our 5% deposit will be returned to us in a few days in the same account where the original transfer was made.
These are the most generic and common steps. The most important thing to consider is why we want to acquire a real state by judicial auction:
- Price and expenses generally cheaper.
- To be assigned to the first habitual residence.
- Purchase to sell.
- Buy to rent, knowing with certainty that the rental prices give more than 5% year-per-year profitability and that the purchase of a property will always prove to be a good investment. Especially when the price is low …