In recent years, the phenomenon of apartment auctions has appeared on the real estate market. The auction sales method is of great interest among realtors. True, for most everything is limited to theory. Like, “the technology is probably good, but it’s not applicable in my segment (location). At the same time, elite brokers are confident that trading is appropriate for the mass segment. And realtors specializing in the economy class believe that auctions are for the luxury segment. Few people try to hold an auction, and, as a rule, after trying once, they speak negatively about the auction. But among realtors there is a group of ardent supporters of the auction method of selling apartments. Brokers are confident that this technology is the future. The Elite.RU portal, having interviewed representatives of large real estate agencies, tried to analyze all the pros and cons of auctions, as well as understand who could benefit from this technology.
What is an auction?
An auction is a public sale of real estate and other property according to predetermined rules. The main condition is compliance with the principle of competition between buyers: whoever offers the highest price for housing will be sold to him at the end of the auction.
If we are talking about buying an apartment through an auction, the opposite is true: the buyer himself looks for lots acceptable to him, taking into account the parameters and cost of the property, and submits applications.
Note! The sale of an apartment under Federal Law 44 through an auction is carried out without fail by budgetary institutions that own the property being sold. There is no other way to implement it; it is a violation of the law.
What apartments are being sold at auction?
You can buy a variety of apartments at auction:
- State or municipal property. The law obliges such institutions to sell property only through auction. It can be received under a state annuity contract, as well as through inheritance if the property is recognized as escheat. Or if the company is declared bankrupt and its real estate is sold.
- Sold by real estate agencies. If the owner urgently needs money and is ready to significantly reduce the cost, a realtor can put his home up for auction. The agency itself may own the property if it previously bought it from another person.
- The property is sold by the bank. If an apartment was pledged as collateral for a mortgage or consumer loan, and the borrower was unable to repay the lender, accumulating debts, it is sold through auction. The bank needs to get money faster. The remainder is given to the borrower.
Note: sometimes buying an apartment at auction is also possible from the developer. It probably won't be of the best quality if the company has to sell it that way.
Buying an apartment in favor of a third party
Buying an apartment in marriage for one of the spouses
Terms of participation in the auction
The terms of purchase at the auction depend on the specific site - they are different everywhere. But in general the criteria look like this:
- Registration on the site and obtaining an electronic key is required. It will be instead of a signature. You can order it from a certified company, SKB Kontur, Taskcom.”
- Age of majority.
- Making a security deposit to confirm the availability of money for the purchase. The amount varies from 100,000 to 300,000 rubles. If the buyer wins the auction, the money is applied to the property. If you lose, they will be returned to your bank account within 5 days.
- Participants register approximately 5 days before the start of the auction.
- The seller can determine the cost of the trade step. For example, if it is equal to 50,000 rubles, then the buyer has the right to raise the price by at least 50,000 rubles.
Example. The apartment is being sold at auction for 2,000,000 rubles, its real market value is 4,000,000 rubles. The trading step is equal to 100,000 rubles. The first auction participant offered to buy the property for 2,100,000 rubles, the second - for 2,500,000 rubles. If they had offered to raise the price not by 100,000, but by 50,000 rubles, this would not have been allowed at the site, because the step price is below the minimum. More is possible, less is not.
How the auction is conducted
The auction begins on the day and time designated by the trading platform. Each lot has its own “auction step” or “trading session step” - the amount by which each participant can increase the sale price of the apartment at one time. Usually the “step” is 0.2–1% of the initial cost of the apartment, according to the law - no more than 5%.
Within an hour after the start of the auction, each participant can agree to purchase property at the starting price. Then the auction is extended for the time set by the platform: in Sberbank-AST it is 10 minutes, in EETP it is 1 hour. During this time, any participant can raise the price of the apartment by one “step”. Then the time counter is reset and the auction continues.
The winner of the auction is the participant who offers the highest price for the apartment. He must pay the full price of the lot within five days after the end of the auction. An apartment can be purchased with a mortgage or using subsidies, such as maternity capital.
How to buy an apartment at auction?
To buy an apartment through auction, you need to select a site and register on it. Most likely, the system will request passport data, TIN and bank account details. After this, the documents will be sent for verification, and after a few days the user will be informed about the results.
What to do after registration:
- List the deposit. It will go to your personal account in the system.
- Choose an apartment and submit an application. After this, the buyer will be checked again. If everything is in order, he will receive a notification of admission to trading.
- Participate in the auction. Typically, trading is held on weekdays, from approximately 09.00 am. First you need to select the lot for which you have applied. If there are several applications, bidding is held. The rates increase every 30-60 minutes. If there is only one, the contract is concluded with the one who submitted it.
- Receive an extract from the protocol of summing up the auction results by email.
- Conclude a purchase and sale agreement (hereinafter referred to as the PSA) with the seller.
- Submit documents to Rosreestr to register the transfer of ownership.
Payment under the agreement is most often made through an irrevocable letter of credit, and the bank acts as an intermediary between the seller and the buyer. Immediately after registration of ownership, the money will be transferred to the seller; this will take about a month from the moment the contract is signed.
Contents and sample agreement
If the owner sells the property on his own, he is indicated in the DCP as the seller. If a home is sold due to bankruptcy, a bankruptcy trustee acts on behalf of the debtor. Information about the parties to the transaction must be indicated in the DCP.
What else should be in the contract:
- Information about the property: address, area, number of rooms, cadastral number, floor.
- A document on the basis of which the property belongs to the seller.
- Details of the protocol based on the results of the auction.
- Cost of housing, payment procedure.
- Rights, obligations, responsibilities of the parties.
- Signatures of the parties to the transaction.
Documentation
To participate in the auction, the buyer will need a passport and a bank statement confirming that he has the money to purchase the property. When entering into a transaction, a passport and a protocol are sufficient.
The seller must provide an extract from the Unified State Register, a technical passport and a document on the basis of which he acquired ownership.
Expenses
The buyer's expenses when purchasing an apartment through electronic auctions are reduced to making a deposit and paying the state fee for re-registration of ownership (2,000 rubles). Additional costs are rare.
Advantages of cooperation with Mossotsgaranty
State Unitary Enterprise Mossotsgarantiya is the only state enterprise working towards concluding lifelong maintenance agreements with dependents. Although private and commercial structures are not prohibited from engaging in such activities.
It is important to distinguish between lifelong maintenance agreements and lifelong rent of an apartment. In the second case, the pensioner receives only cash allowance, without food and the necessary set of household services. The Mossotsgarantiya works precisely in the direction of monetary and in-kind support for the recipient of the rent. Other benefits:
- A one-time payment of 3% of the market value of the residential premises.
- The ability to choose types of household and social services, as well as individuals and legal entities to provide these services.
- Increasing the salary taking into account the growth of the cost of living in Moscow.
- Full transparency of the transaction - falsification on the part of the state enterprise is excluded.
- Possibility of choosing the form and details for transferring the monthly amount of cash.
Non-state companies often offer more attractive conditions. But by collaborating with them, older people put themselves at great risk. The likelihood of finding scammers, especially in the capital, is always extremely high. Mossotsgarantiya covers all costs for completing the transaction, which is another significant advantage.
How to sell an apartment through government procurement?
It is more difficult for an individual to sell an apartment through a UIS auction than for a budget organization. In the EIS, most of the advertisements are about sales, not purchases.
How to sell an apartment to the state through an auction:
- Find in the Unified Information System a notice of the purchase of real estate in the region of its location.
- Read the terms of reference to understand whether the living space is suitable.
- Submit an application to participate in the auction.
- Participate in the auction. The one who offers housing at a lower price will win.
- Conclude an agreement and hand over the keys to the apartment to the customer.
Note! Selling an apartment through auction takes quite a long time. If the customer has no applications at all, the auction is not held. At least one participant is required.
Comments: 2
Your comment (question) If you have questions about this article, you can tell us. Our team consists of only experienced experts and specialists with specialized education. We will try to help you in this topic:
Author of the article Irina Rusanova
Consultant, author Popovich Anna
Financial author Olga Pikhotskaya
- Tatiana
01/11/2021 at 23:43 Could there be fraud on the part of the Mossotsgarantiya? First, poison the person who entered into the annuity agreement and can I invite my notary whom I know?
Reply ↓ Anna Popovich
01/12/2021 at 15:16Dear Tatyana, the auction is held by the Moscow City Department and it is not possible to invite a third-party notary.
Reply ↓
Risks of buying and selling an apartment through auction
Buying an apartment at auction is accompanied by quite a large number of pitfalls:
- Old tenants may be registered in the apartment. They can be written out by agreement or through the court. It is more difficult if a minor child is registered: all actions will have to be coordinated with his parents or guardianship authority.
- Reservation of the right of lifelong residence by a stranger. This happens when the seller initially buys an apartment under a contractual agreement with the right of residence by another person. It is almost impossible to challenge this, but such a nuance is usually communicated before the start of trading.
- Unauthorized redevelopment. The new owner will have to re-register the documents themselves or return everything to its original form.
- Debt for utilities. It does not pass to the new owner, but the HOA is unlikely to be interested in this. If there is a long period of non-payment, the electricity or water supply may be cut off, and the buyer will have to deal with this themselves.
- Purchasing low-quality housing. Most of the real estate is sold through auctions with “grandmother’s” renovation or without it at all; having problems with utility networks.
Legal advice: sometimes people pay even more than the market value for apartments at auctions, getting excited. Dubious savings. It is advisable to decide on the maximum amount that can be spent on housing before the auction begins.
The risks for the owner when selling an apartment through an auction are minimal. He can set any price. But if the buyer subsequently abandons the transaction and does not compensate for the losses incurred, he will have to go to court to recover.
Why didn't they sell the penthouse in the Vienna House?
The auction method of selling housing became widely known in 2014 thanks to an attempt to sell at auction one of the most expensive properties in the capital at that time - a five-level penthouse with an area of 1,800 square meters. meters in the Vienna House residential complex (pictured below).
The sale of the penthouse was handled by the Blackwood agency, and the president of the Public Figure trade union of realtors, Alexander Sankin, who, in fact, is the founder of the auction method of selling housing in Russia, was brought in to organize the auction. On his Facebook account, Mr. Sankin writes that he is a trainer of millionaire agents and champions of the real estate market.
At that time, realtors estimated the market value of the penthouse in the Vienna House at $40-70 million. However, this lot was put up for auction with a shocking starting price of 1 ruble. The auction was scheduled for March 19, 2014, but never took place.
“The sensational story with the auction at the Vienna House was also nothing more than an advertising campaign,” believes Timur Sayfutdinov. – A stir was created around the object, but it all ended with information noise.
The realtor’s words are confirmed by Colliers International PR Director Marat Muradyan, who at that time headed the PR service at the Blackwood agency:
– The auction never took place, but I think the action was a success. The fact that “the largest apartment in Moscow will be sold at auction with a starting price of 1 ruble” was heard from every voice. Almost all Moscow publications wrote about this, and they talked about it on all federal channels. As a result, the number of publications, radio broadcasts and other mentions in the media reached a thousand.
The joy of a PR specialist can be understood, but it is unlikely that the seller of an expensive penthouse had the same goals. The owner needed to sell the property, but the luxury penthouse, despite the hype in the media, still has not found its owner. Ilya Menzhunov says that the penthouse is still in the TOP 10 most expensive apartments in the capital. But the owner no longer hopes to sell the entire property. As Ekaterina Rumyantseva, chairman of the board of directors of Kalinka Group, notes, the owner is ready to cut up and sell the five-level apartment in parts.
Lawyer's answers to private questions
How long does it take to buy an apartment at auction?
About two months. You can register and receive an electronic key in one day. Finding a suitable lot takes an indefinite amount of time: it all depends on what the buyer wants. Registration is required 5 days before the start of the auction; the auction itself can be held for one hour or a week. When submitting documents through the MFC, ownership rights are issued in 9 working days; directly to Rosreestr – 7 working days.
I want to buy an apartment through an auction. The owner failed to pay the mortgage, the bank is selling it. How to find out if there are debts on contributions for major repairs?
You can find out if there is a debt by requesting the latest receipt from the seller.
I won the auction, but I want to refuse to buy the apartment. What will be the consequences?
According to Art. 448 of the Civil Code of the Russian Federation, in case of refusal to sign the protocol, one party is obliged to compensate the other party for losses caused by the refusal.
We looked at the apartment, the seller bought it several years ago at auction, it was arrested by the bailiffs. What are the risks?
It all depends on how many years have passed since the purchase. If at least three years have passed (the statute of limitations), the likelihood of third parties appearing who can lay claim to the property is reduced. You need to order an extract from the Unified State Register of Real Estate and see if there are any restrictions on the apartment.
I am buying an apartment at auction, it belongs to the mortgage debtor. How long will it take for the mortgage to be lifted?
The encumbrance is removed within three working days after the debt to the bank is repaid.
