Think about the Bank auctions is to think about litigation and risks. however you could purchase property from a 60% 0 40% below its value. If you are encouraged to take certain risks for a extraordinary real estate investment I recommend you continue reading.
Bank House Auctions are an alternative to acquiring a property at a low cost.
Acquiring a house or apartment is one of the main financial objectives of Mexicans. And there are different ways to achieve it, through a mortgage credit, either through Infonavit or a bank.
Another option is to take advantage of the bank auction of a property, because they are usually up to 60% cheaper, according to the National Commission for the Protection and Defense of Users of Financial Services (Condusef).
What is a House Bank Auction??
Los Bank auctions They put properties up for sale whose owner was sued by a banking institution for not paying the mortgage. Banks can claim housing rights by law. Y, to get the money back, These institutions put these properties up for sale at a lower price.
And bank mortgage auction It is a legal process through which a property whose owner was sued for not paying the mortgage is auctioned off..
This is because of the thousands of loans that banks provide each year, many people cannot make the corresponding payments. He mortgage auction It works as a legal mechanism to recover the properties left as collateral in case of non-payment. In this way, banks recover part of the investment or credit they granted.
How were bank auctions born??
The mechanism ofbanking rowsor banks arose from the real estate crisis of 2009 to stimulate the market and for banks to recover part of their lost investments, at the same time that they offered people with a reduced budget the possibility of acquiring assets.
In simple words, This is the sale of houses seized by banks due to non-payment by the debtor of the mortgage loan..
The bank asserts its right to allocate the property and offers it to the market at a fraction of its commercial price., recovering a part of the lost capital.
It is important to highlight that It is not an ordinary sale, because the property is not purchased directly, but the legal rights to be awarded the property and subsequently write it in your name.
Types of Mortgage Bank Auctions:
Judicial Auction
In the judicial auctions The properties are part of a public auction before a judge. To participate you need to deposit 10% of property value through Bansefi. The price of the home is determined by the bids on the day of the auction at the courthouse.
Bank Auction
In the bank auctionss credit institutions offer properties directly or through legal offices.
Transfer of contentious rights
Where you acquire the rights to the lawsuit from the bank which he filed against the client. Thus, The mortgagee is replaced and it is now your responsibility to complete the judicial process of adjudication of the property.
Once the trial is won, You can now continue with the deed and possession of the property.
The PRICE you pay to the bank in these cases is up to 30 percent of the commercial value of the property.
Transfer of awarding rights
In this, The bank has already won the adjudication trial, but the property has not yet been deeded. He puts it up for sale at an auction price to recover the costs of the trial and obtain a difference in favor.
You pay this auction price to the bank and continue alone with the process of deeding and taking possession of the property..
The PRICE you pay in this modality is approximately 70 percent of original value.
Is it safe to buy houses at Bank Auction??
IT IS SAFE, in the sense that the process is carried out with the accompaniment of some certified advisor, who is in charge of ensuring that everything is done in order.
Main Risks of houses in Bank Auctions:
- The previous owner or owner who owes the bank can continue in the property.
- The debtor the bank sued may have defaulted on other payments: building, agua, luz, etc.
It is also recommended to go to official institutions, to request reports on bank auctions. Since there are “coyotes” or people who pose as advisors, but they sell non-existent properties or that do not belong to them. In addition, you must verify, in the Public Property Registry that the house belongs to a bank and not to an individual.
How can I buy a house at Bank Auction??
As we already saw There are two types of property acquisition through a bank auction: the transfer of litigated rights and the transfer of adjudicatory rights.
In the Transfer of Litigation Rights, the rights of the lawsuit filed against the client who did not pay his mortgage loan are acquired. So, you acquire the responsibility of completing the judicial process of adjudicating the property. After winning the trial, you can start with the deed and possession.
Here, paid to the bank in cash, what he asks for the session of the litigious rights. Sometimes, the bank asks until 30% of the commercial value of the property.
In the Transfer of Adjudicatory Rights, The bank has already won the trial and it is going up for sale. The price is higher than in the previous case, because the bank seeks to recover the costs of the litigation and obtain a difference in favor. Nevertheless, These properties can also be up to 40% below market value.
When the transfer of adjudicatory rights is paid, yes you can request financing.
Myths and Truths about BANK AUCTIONS
MITO 1: YOU CAN BUY A PROPERTY 60% CHEAPER.
TRUE. This type of purchase allows you to acquire a property that lowers its value by up to 60% of the value in the market. Bank auctions put properties up for sale whose owner was sued by a banking institution for not paying the mortgage, so banks can claim housing rights by law.
MITO 2: WHEN PURCHASING WITHIN A BANK AUCTION, THE PROPERTY LOSES GOODWILL AND THE PROCESS TAKES MANY YEARS.
FALSE.According to the Wiggot portal, You can buy a house or apartment at a bank auction well below the real pricel y, also preserve or increase its capital gain.
In a matter of time, It must be considered that it depends on the modality in which you decide to acquire, since if the lawsuit is still in process, it may take up to 2 years, but if the awarded rights have already been earned, can be from 3 a 6 months.
MITO 3: YOU CAN PURCHASE THE RIGHTS OF A MORTGAGE JUDGMENT.
TRUE.There are two types of mortgage auctions, which consist of the transfer of litigated rights and the transfer of adjudicatory rights.
Transfer of contentious rights: In this case, the rights of the legal claim that the bank filed against the mortgage debtor are acquired, who for some reason could not continue with the corresponding payments.
Transfer of awarding rights: This is when the banking institution proceeded with the lawsuit against the mortgagor and won the adjudication trial., puts the property up for auction to recover what was spent in said trial and losses due to the mortgage debt.
MITO 4: IN THE PURCHASE OF LITIGIOUS RIGHTS THE PROPERTY IS NOT ACQUIRED.
FALSE.In the purchase of the litigated rights the right to sue is acquired, however, he mortgagee also changes. Thus, The property passes into the hands of the creditor once the Judicial process.
While, The property that is in dispute will pass into the hands of the person who purchases the disputed rights once the lawsuit is consummated., Therefore, the time of the process must be taken into account to be able to dispose of the property..
MITO 5. ALL WRITING EXPENSES ARE borne by the BANK.
FALSE. Once a property has been acquired through any of the modalities of a bank auction, The registration costs are the responsibility of the new owner.. Also remember that as in any home purchase or sale, There are issues that you should consider to verify if this option is for you or not..
Risks of a Bank Auction
Although Bank auctions are an opportunity to buy a cheap house It is important not to leave behind any details that involve the property.
“The first thing to take into account is that it is not possible to visit the property since it is most likely that it is still inhabited by the debtors. This means that it is not known what state he will be in once the trial is won.".
TrueHome
Extra expenses
Extra expenses that are generated derived from the acquisition of the purchase of the home under a bank auction scheme:
- That the property is not up to date with the payment of services such as water, light and property
- Payments corresponding to the appraisal, deed for change of ownership
- Expenses derived from the payment of fees of notaries and lawyers hired for the trial.
Full cash payment
It must be considered that You cannot pay for a property at a bank auction through a mortgage loan; You must have the total amount that is being requested in cash, in addition to the extra expenses mentioned.
Occupants of the house have not left yet
He also added that another factor that must be considered is that many times the occupants of the home do not leave., even though you already acquired the property legally.
“In these cases you must hire a lawyer specialized in evictions so that it can be occupied. It must be taken into account that this type of process can take months or even years.. In most cases, After covering the cost of the property, it is delivered within a period of one to two years, although it may be less time, depending on the legal circumstances in which you find yourself”.
TrueHome.
Below we present a summary of some risks that you should take into account.:
- Pay the property appraisal.
- Pay for the eviction process.
- You cannot acquire a property through a bank auction with a mortgage loan.
- It is possible that the property has some debts, Therefore, you must update any services that you have not paid for..
- It is not possible to visit the property before purchasing it, so you can run the risk that the construction is not in good condition.
- Although during the trial you cannot visit the property, you can be aware of the details of the home with the help of the person who is handling the legal process for you..
Go to an expert trial lawyer
If you are interested in purchasing areal estate auction, Leonardo Gonzalez recommended having the advice of a notary or a lawyer to guide you on the procedure and the expenses that must be budgeted in terms of rights, taxes and fees that must be covered.
Leonardo Gonzalez expressed that the possibility of liquidating the credit should also be evaluated in such a way that the adjudication process is concluded..
Director of Your Easy Mortgage recommended that a trial lawyer review the entire process that is being carried out and the original contract, because if it is not well managed, there is a risk of losing property.
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