ertainty of the sale, faster timings, transparency of the process, thanks to the presence of qualified professionals, and the possibility of buying a property at a reduced price compared to the market value. These are some factors that have led an increasing number of people to purchase real estate at auction rather than through private negotiation. However, the real estate auction market has complex mechanisms. What to watch out for? “Buying at auction brings undoubted advantages of an economic nature for buyers, under notarial supervision that stands as a guarantee of the safety of the transfer for both the seller and the buyer,” explained Bruno Saglietti, president of Apep – Professional Association for Executions in the province of Padua, who provided some tips on how to safely conclude the purchase and sale of a house at auction.
Seven Tips on auction prices and real estate
1. Spending budget
The first thing to do is define a priori the budget for the investment before attempting to buy a house at auction. This step is crucial to better understand whether it is possible to further pursue the purchase or whether it is best to steer the wheel toward other types of deals instead.
2. Base auction price and minimum bid
The base auction price is determined by the execution judge on the basis of the appraisal report and is announced through the order of sale. Keep in mind, however, the regulatory intervention that took place 8 years ago: since 2015, in fact, by law, one can buy at auction even by offering a figure lower (by 25%) than the base auction price.
3. Deposit
The amount of deposit to be paid to participate is 10% of the value of the purchase bid.
4 – Expense Fund
The amount required instead for payment of taxes and fees for the transfer, the so-called “Expense Fund,” depending on the courts is required in whole or in part only after payment of the balance price, shortly before the transfer.
5. Mortgage
It is possible to apply for a mortgage when buying at auction. Making it possible to make the purchase without having the entire amount at hand.
6. Auction discount
Whenever a property at auction remains unsold, after some time, it will go back up for sale, at which point it will be sold at a 25% lower price.
7. Balance payment and property transfer
Once adjudication has been obtained, usually within 120 days, it will be necessary to proceed with the payment of the balance price and ancillary expenses, then wait for the issuance of the decree of transfer and delivery of the keys of the property.
Real estate auction trends in 2023
“Real estate auctions today are part of a dynamic and evolving market that requires in-depth and up-to-date knowledge of the sector,” also confirmed Luca Bonacina, co-founder and head of technology at Cherry, a fintech startup that created the “Cherry Brick” observatory, on the trend of real estate auctions in the first four months of 2023.
The study found that from January to April there were 56,500 properties subject to auction attempts (down 18% from the same period in 2022), with a total value of the minimum starting bid of about 9 billion euros (down 22% ). If we then analyze the newly published auctions, there were 58 thousand new auction notices published in the period from January to the end of April 2023 (-20%), of which 55% refer to properties for residential use, 19% for commercial use, and only 4% for industrial use.
Fun facts:
- Lombardy remains the top Italian region for the number of new auctions published (7,758, -22% over the first four months of 2022), followed by Sicily (12%, with 6,930 auctions) and Lazio (10%, 5,815),
- Rome, on the other hand, remains the top city for auctions surveyed (1,491, -6% over the first four months of 2022);
- Emilia-Romagna has the highest average auction base in Italy (317,000 euros, +68% over the first four months of 2022), Valle d’Aosta and Molise the lowest (103,000 euros);
- In Milan, for a residential property, the average auction base is at 264,000 euros.
