Entering the auction market to acquire a property at a bargain price is a trend that has gained popularity in recent years. It is estimated that in Spain there are around 4,000 public and private auctions for a value of 400 million euros through which the consumer can purchase a wide range of goods, from real estate, to vehicles, to small and large household appliances.
"Auctions are being implemented as a common method of accessing goods, which is why their growth is notable," says Javier Díaz-Gálvez, co-founder of Diario de Subastas, a portal that concentrates information on BOE auctions -in which Those from the Treasury, Social Security and the courts are included- and the private offer from various platforms. However, the phenomenon is not taking place in a homogeneous way throughout the territory, since the most inhabited autonomous communities and those that register the greatest number of bankruptcies -Andalusia, Catalonia, the Valencian Community and Madrid- are the ones that register the most auctions. assets accumulate, as can be seen in the graph.
The auction market is expected to continue expanding this year due to the entry into force last September of the reform of the Bankruptcy Law. "Yes, there will be many more goods on public offer in a very short time due to the latest legislative developments," confirms Díaz-Gálvez. In fact, bankruptcies increased by close to 68% in the annual rate in the first quarter of the year, according to data from the Association of Property and Mercantile Registrars of Spain.
Another phenomenon is added to the rise of tenders: "Large companies, to give a second life to their surpluses or because they want to renew their fleets, are putting goods up for sale at auction," explains the expert. Likewise, the promotion of digitization has contributed to the expansion of this market, which "has led many goods that were previously sold in a more opaque way to end up being offered at digital auction," adds Díaz-Galvez.
The lawyer Antonio E. Gómez Gallardo expresses himself along the same lines, considering that online auctions have fostered "a certain feeling of opportunity" and that the process is "easy." "And it is from a technical point of view, but there is also a lot of imprudence," he says. "People go in search of opportunity and a bargain, as if they were going to the casino."
In this sense, it distinguishes between four public profiles that are interested in this market: the professional investor, such as investment funds, who bid for large lots; the non-professional investor, who is the most frequent; the third group, former auctioneers who are dedicated to lending money to executed -debtors- who try to save properties taking advantage of small legal loopholes, and the fourth profile are the squatter mafias who consult the active auctions to locate the properties and occupy them before they are sold. award. "When the new owner arrives at the apartment, the gangsters ask for a ransom," says Gómez, "and they are usually serious in this sense: when they give them the money, they leave."
The incentive for those who bid at an auction is to get a discount from the market price, although this is not always possible. According to Javier Díaz-Gálvez, the savings that can be expected is "substantial", between 20% and 30% on average. "Obviously, that is the rate of risk that the potential buyer assumes that the auctioned property includes some unpaid tax, some charge pending lifting and it takes some time to be able to enjoy it." However, he points out that "the fact that it goes on the market without intermediaries makes the price more tempting for the end user."
To avoid acquiring a property in this way from becoming a ruinous business, the lawyer Antonio E. Gómez Gallardo recommends requesting a report on the registration charges. The experience accumulated over the years in the trade has led him to the conclusion that sometimes it is more worthwhile to buy the apartment next to the one that is being auctioned, since in the latter the buyer must assume the community expenses and IBI in arrears and perhaps the apartment will be occupied or destroyed. "Auctions are only interesting when you really take them as a bargain," he says.
The lawyer recalls the case of a garage offered by the Tax Agency in Ibiza and which contained an eight-meter-long boat, probably stolen. "The winner of the auction paid for the storage room but also took the boat, which was worth a fortune." On the contrary, it could have happened that when opening the garage door, a clandestine workshop was found. In cases like this, he asserts, the administration that has put the property up for auction "doesn't care."
Having as much information as possible about what is going to be acquired, since all that glitters is not gold, is essential. In addition, the buyer must take into account certain aspects. For example, as Gómez points out, "do not give importance to the appraisal value, which in many cases is not real." Thus, the auction of a flat valued at 90,000 euros can end up being awarded 450,000 euros. Because? Many times the appraised value is old and does not reflect the current market price.
Another recommendation is to visit the property before buying it, ring the bell and ask the neighbors to find out why it has been put up for auction. If you cannot access it, as usually happens in public administration auctions, it is advisable to visit another property with the same characteristics of the building to see the distribution. "There are many people who, in this way, get to know the personal circumstances of those executed and decide to back out," says the lawyer.
In any case, he insists on the need to request a report on the auction charges, since there may be several mortgages on record. When does the buyer have to repay the money on the defaulted mortgage loans? "If it is the execution, it is canceled along with all subsequent charges regardless of whether the debts are settled with the money from the auction," Gómez replies. However, the successful bidder must be responsible for the mortgages prior to the foreclosure, if any.
Another tip is to bid only when you have the money to buy the item. Although the law allows it, it is not advisable to get involved. The reason is that in the Treasury and Social Security auctions, the successful bidder must pay, once a 5% deposit has been paid, the rest of the money within a period of 10 days -40 days if it is a judicial auction- . "The law allows you to mortgage the property but no bank is going to give you the money to buy an auctioned property," says Gómez. And he warns that, if he does not have the entire amount, the successful bidder is exposed to falling into the networks of private lenders who offer "terrible conditions."
Despite this, he ensures that there are auctions for all budgets. And yes, it is possible to find bargains. "I remember some storage rooms that the Treasury auctioned in Manilva (Málaga) that were awarded for 1,500 euros and, later, some buyers resold them for 9,000 euros."
If this were the case, the buyer must be proactive and not lose sight of the property transfer tax, which since last year has been set with the fiscal reference value, the average value of the transfers that notaries communicate to the Treasury of the properties with similar characteristics in the area. It could happen that even having acquired a flat for only 120,000 euros, the calculation of the tax is made on 200,000 euros.
