Repsol YPF

In periods of crisis, mortgage defaults and tax debts increase, which is why many properties go to public auction as a result of a legal ruling. If a few years ago, this way of purchasing property was pretty much confined to people with first-hand knowledge, such as court employees and professional auction buyers, it is currently much easier to gain access to property auctions, thanks to the restrictions imposed on this activity by the General Regulation on Social Security Collection, passed on 11 June 2004. 

Along with public property auctions, in times of crisis there are plenty of private auctions held by specialist companies such as Tulipp, Atisreal  and CB Richard Ellis, who are often selling new homes and buildings (commercial units and warehouses) which the developer cannot sell, as well as properties that have been repossessed by banks and financial institutions due to a failure to meet the associated mortgage repayments.

Some banks feature flats on their websites with higher prices than those achieved at property auctions, which are generally open to negotiation. If you are interested in buying a flat at an auction, you should be aware that it is possible to achieve discounts of between 18 and 30% of the asking price. We recommend that you visit the Public Auction portal, which has up-to-date information on all of the public and private property auctions in Spain.  

Getting down to work 

Once you have identified the property you want on the Internet, you should visit it in order to check the condition that it is in and make contact with the occupant which could be the defaulting owner. You can reach a profitable agreement  with the debtor, such that he sells it to you before the auction is held and both parties will benefit: the owner can then meet the overdue payments, releasing the flat from the auction, and you will acquire the property at a lower cost than that established by the open market. It is essential that you find out about the encumbrances associated to the property at the Land Registry, as well as asking the bank about your credit options for financing the property purchase. 

At public property auctions, you have to provide a deposit before the event is held and before bidding on the day of the auction. This deposit is returned to those people who do not make a successful bid. In order to buy a flat at a public auction, you must be the highest bidder, although this does not guarantee the acquisition of the property either, since the bidding must cover a percentage, depending on the property offered and the kind of auction.  

At a private auction, you must register on the company website and make the right bids. If you are awarded the property, you must sign an earnest money contract and pay 10% of the total transaction cost, and within a period of approximately one month, the contract of sale will be formalised. If you decide to participate in a property auction, it is advisable to seek professional advice, either through an estate agent, from a lawyer or from auction experts. These specialists will not only help you whilst the auction process is in progress, but will also speed up the legal and administrative formalities after the property is awarded to you. 

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