Auctions are a superb opportunity to buy property in Italy at knockdown prices – especially with an estimated 80,000 available on the market at any one time.
However, they are an option that remains very much ignored, especially by Brits and other foreign investors.
Yet the advantages of purchasing a home in Italy via auction are considerable.
Apart from the fact that you’re buying a home at a fraction of its true market value, you also avoid paying geometra (surveyor) and notary fees, which between them can cost around £4,000-£5,000.
In addition, in some auctions overseen by a court, an amnesty may be granted if you purchase a property that has partly or entirely been built without the appropriate planning permission – normally a serious breach that can prevent a property being sold.
Below is a broad outline of how the process works.
However, as with all overseas property purchases, and particularly in Italy, it is advisable to use the services of a reputable estate agent or company specialising in auction sales.
Properties in Italy come up for auction for three main reasons:
When the owner has defaulted on mortgage repayments meaning the property has been or is about to be repossessed;
When a governmental or a public body owns them and wishes to dispose of them;
When they have been confiscated in criminal proceedings.
The process of purchasing at auction in Italy has been made much easier since a change in the law a decade ago.
It made a previously arcane arm of the real estate industry suddenly more transparent – principally allowing for auction notices to be made publicly available, along with details of the properties due to go under the hammer.
That, and the global economic crash in 2007-08, has seen a surge in the number of available foreclosure and other auction properties.
Auctions are typically held in the offices of a lawyer/accountant etc, if they are bankruptcy/foreclosure sell-offs. Judicial auctions, on the other hand, usually take place in court.
Ahead of an auction, a surveyor will provide inspection report on the asset for sale, outlining any issues such as subsidence. In addition, prospective investors can examine the property in person for themselves.
Auctions are open to anyone except the existing owner, as long as they register in advance. This sometimes has to be done as early as 60 days before the sale.
A deposit must also be paid, equal to ten per cent of the auction starting price, plus the costs of registering the property under your name should your bid eventually be successful.
Most Italian financial institutions offer mortgages to cover properties bought at auction. However, if you intend to buy using a mortgage, you must provide a promise letter from the lending bank.
Auctions are conducted either “with reserve” or “without reserve”.
If they are “with reserve”, prospective buyers hand in offers in sealed envelopes, which are opened just before the sale gets under way.
The highest offer is used as the starting point for all bids. The winning bid must be at least 20 per cent of the reserve price for it to be accepted. In any case, the seller has the right to refuse any winning bid.
Where sales are staged “without reserve”, the highest bid wins out, irrespective of price.
In both types of sale, the winning bidder has up to 60 days to pay in full for the property. There is no cooling-off period and if for whatever reason they change their minds afterwards, they lose whatever deposit they have already paid.
Other prospective buyers whose bids were unsuccessful simply have their deposits returned to them once the auction closes.
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