Property at bankruptcy auction
Inexpensive housing attracts everyone. But where and how to buy real estate at a price below market value is the question. Nowadays, electronic trading and judicial auctions are becoming increasingly popular. As foreign experience in purchasing real estate at a bankruptcy auction shows, this works perfectly. In Russia and many other CIS countries this is also real. In the Russian Federation, judicial auctions are conducted in accordance with the Federal Law “On Insolvency (Bankruptcy)”. It states that all types of property of a bankrupt enterprise can be sold, including any real estate (both residential and commercial). This confirms the fact that each of us can buy real estate at auction! However, it is necessary to take into account all the pros and cons of this transaction.
Buying real estate at auction
Buying real estate at bankruptcy auction is not an easy undertaking, but quite profitable. This is one of the trends in business ideas for 2016. First, you need to remember a few rules and dispel a few myths regarding a bankruptcy real estate auction:
1. Anyone can learn the technology of buying real estate through bankruptcy auctions. This is true!
2. All bankruptcy auctions were purchased by bankruptcy trustees and their associates. It is a myth. The bankruptcy trustee can sit down for a long time if he holds some kind of auction for himself or for a bribe.
3. To purchase real estate at a bankruptcy auction, you need to have a lot of cash, at least 3 million. It is a myth. You can use credit funds to purchase real estate at auction.
4. There are a lot of pitfalls when purchasing real estate through bankruptcy auctions. This is true. However, they have all been known for a long time, marked, and the specialist knows how to deal with each of them.
5. To purchase real estate through bankruptcy, you need to know the real estate market well. This is also true. Otherwise, you may buy an illiquid property and then not be able to sell it.
Bankruptcy auctions
There are a number of online platforms where you can purchase real estate through bankruptcy. Nobody hides them, they can be easily searched on the Internet, the most common ones are Sberbank-AST and Fabrikant. They act as aggregators of bidding from other, smaller platforms, so to participate in bankruptcy bidding you only need to have access to these two. Purchasing from a bankruptcy auction is possible only by persons who have passed digital identification and received an EDS - electronic digital signature. It is issued by a number of certified organizations scattered throughout all regions of Russia; the cost of the digital signature ranges around 5-6 thousand rubles. per year, which is simply not comparable with the possible profits from transactions of purchase and sale of real estate under bankruptcy.
How is the process of selling debtors' property at bankruptcy auction organized?
To begin with, let us clarify that the only place where the sale of debtors’ property actually takes place is the official electronic trading platform. Essentially, this is a specialized company that has been working with debtors for a long time and has its own high-speed and convenient platform for quickly selling property via the Internet.
In order to understand how auctions for the sale of bankrupt property work, it is enough to carefully study 1-2 sites; in total there are at least fifty of them. Here are some tips to get you started:
- You can find the maximum number of interesting objects of debtors’ property on the Sberbank-AST platform.
- The selection of lots and the search for objects presented for sale at auction are organized competently and conveniently on the website of the federal trading platform “Fabrikant”.
- The Lot-online and B2B-Center sites attract investors not only with good offers on the cost of objects, but also with the modern design of the platform itself, thereby increasing the speed of working with debtors’ property.
Catalogs of sites update lists of debtors and property for sale daily. For a novice investor, it doesn’t make much sense to monitor what property or car is up for auction on a daily basis. We recommend checking interesting properties for sale every 3 days: you will spend less time and will not miss the appointment of auctions for the desired acquisition.
Property at bankruptcy auction
What kind of real estate is sold at bankruptcy auctions? Every one is different! Rooms, apartments, shares in apartments, private houses, garden plots with a house, offices, warehouses, garages, industrial buildings and entire factories are put up for bankruptcy auctions!
It is not uncommon to see the sale of apartments purchased with a mortgage by individuals who were unable to repay the loan and the bank repossessed their home. Bankrupt enterprises are selling off their dilapidated assets for literally nothing; the value can be reduced by 100-1000 times relative to the estimated value! There is also no need to worry that the transaction will be illegal and that the property purchased at auction will be taken away from you. The entire process takes place under the control of several government bodies, including the arbitration court, the bailiff service, the tax inspectorate and some others.
An undoubted disadvantage is the impossibility for some participants of a preliminary inspection of the property for its physical condition, as well as a documentary check (an unpleasant “surprise” may be additional debts that are automatically included in the price of housing). When buying housing at judicial auctions, you also need to pay attention to the consent of the second spouse and the presence of minor children, otherwise you may be drawn into painful legal proceedings. Another disadvantage of auctions, which limits the number of participants, is the need to quickly pay for housing purchased at auction. Thus, only those who have cash “at hand” and who are able to pay the entire amount within the time established by the auction conditions can take part in auctions.
What's next
Sign up for a free 5-day training by Oleg Selifanov. During the training, you will become familiar with the general scheme of purchasing property at bankruptcy auctions, analyze real successful and unprofitable transactions, and learn how to buy bankrupt property without investments.
Free 5-day training on making money trading bankruptcy
Open the EFRSB and look for yourself at the real estate options that are for sale in your region. If you are interested, sign up for training and share your results in the comments. Good luck)
Technology of buying real estate at auction
We are ready to tell you about the technology of buying real estate at auction in more detail, but you must understand that such consultations cannot be free.
The cost of one consultation is 2500 rubles.
Payment is made to electronic wallets Webmoney, Yandex.Money, QIWI, Rapida, by bank transfer or through the Svyaznoy terminal. When applying, please indicate which payment method is more convenient, you will be given the details.
The consultation is conducted by a real estate market specialist with personal experience in bankruptcy trading.
Consultation on the purchase of real estate at auction is carried out by telephone, Skype, Viber or other means of voice or video communication
The duration of the consultation is no more than 1 hour.
Consult
Since the topic of buying real estate at bankruptcy auctions is of interest to so many, we decided to cover some of the most frequently asked questions right here.
How many bankruptcy platforms are best to register on? 2 or better 5? Does it make sense to have 5 or is everything almost the same everywhere?
There are several large federal electronic platforms for bankruptcy trading and a huge number of smaller, regional or industry-specific ones. You definitely need to register with the main ones - Sberbank-AST and Fabrikant, and you can and should also register with a couple of smaller ETPs in your region. Many offers “flow” from small sites to large ones, which is why there is an opinion that registration with the manufacturer and savings bank may be enough, but a number of trades never go beyond the local sites, so if you want to find interesting and unique offers, monitor those what's smaller!
What documents must be in electronic form to participate in bankruptcy auctions (passport, TIN, and what else?)
To participate in the auction, you must first obtain an electronic signature - an electronic digital signature. Registration of an electronic signature is a legal procedure that requires your personal presence and presentation of your passport and other data. Logically, in the future, the digital signature will replace the passport and fully confirm your identity. However, in order to be accredited on a particular site and participate in bidding, in addition to the digital signature, it may be necessary to upload electronic copies of the Passport, Taxpayer Identification Number, SNILS and some other documents. It is better to have ALL documents that identify you scanned on hand.
Public offers are more favorable in price. How do they work, how long does it take to reduce the price of an item?
Each lot on each site may be traded differently. Conditions for price reduction, participation in tenders, requirements for participants, for documents, for making a deposit, etc. may change and there is no definitive answer to this question. You should carefully read the bidding regulations for each lot, it’s all indicated there.
How to contact the bankruptcy trustee?
Surprisingly, contacting bankruptcy trustees is quite easy. The lot description always contains the name of the bankruptcy trustee and contact information. Sometimes a complete set - phone, e-mail, office address, sometimes just one thing. According to the specified data, during business hours, bankruptcy trustees are required to respond and provide information. If the bankruptcy trustee does not answer your call, call again. Ignored the mail - write a second letter from Fr. This mobilizes them.
Who is the best person to contact to obtain an electronic signature?
There are a lot of certification centers in Russia. In every major city there is at least one organization that issues digital signatures, which can be easily searched in a search engine for EDS for electronic trading in N-sk. For Moscow and St. Petersburg, the question “where to issue an electronic signature” does not arise at all. Digital signatures differ in the number of sites where you can get accreditation, and, of course, in price. Look for the optimal ratio of these two parameters and you will be happy!
At what age can you participate in bankruptcy auctions?
By analogy with transactions with securities, the following set of conditions is obtained: under 14 years of age, minors cannot make transactions at auctions; only parents (guardians) can do this for them with the permission of the guardianship and trusteeship authority; from 14 to 18 years of age, minors can make transactions independently , but only if you have permission from your parents (guardians) FOR EACH TRANSACTION, from the age of 18 you will be able to participate in auctions WITHOUT restrictions.
What you need to know when buying a home at auction
Most of the objects put up for auction are apartments with encumbrances. The main problem here is the huge debt for utilities. As a result, such apartments often lack heating and electricity.
Another problem is that in most cases the apartment is put up for sale together with the tenants registered in it, and it will be very difficult, and in some cases impossible, for the new owner to sign them out after purchasing the home.
The whole point is that people registered in an apartment can be deregistered through a judicial procedure. But minor children cannot be evicted from it under any circumstances. Accordingly, you will not be able to sell such an apartment in the future.
When buying real estate at auction, contact the passport office to find out who was previously registered in it. This is necessary so that you can make sure that no one has rights to this housing.
Property at auction can be purchased for more than its actual value. Sometimes the initial cost may differ slightly from the market price. And with the hype, it’s hard to notice that the price has soared much higher. Therefore, first, find out how much a similar apartment costs in a given area, so as not to overpay extra money.
Even if no one lives in the apartment put up for auction and is not registered, then this transaction still cannot be called safe, since no one will give you a guarantee that the owner will not soon appeal this transaction in court and declare it invalid.
