How to purchase foreclosed real estate at auction
Foreclosure auctions in Brazil are increasingly sought after by those looking for good real estate business opportunities. With the ability to purchase properties at prices 50% below market value, foreclosed real estate purchased at auction are fantastic investment opportunities.
The purchase of properties at auctions is a practice that has been growing for years. According to Caixa Econômica Federal, this activity grew 90% since 2006 in the country. If this spike in interest is a reflection of the lack of financial control shown by those who could not pay their property debts (and, therefore, they ended up losing their property), it also represents a great business opportunity.
- The first stage is to carefully read the public notice and check the description of the property to be sold and the possible debts associated with it.
- If the auctioneer does not have an updated certification of property ownership, request the property’s updated registration (the number of the registration and the notary office must be part of the auction’s public notice).
- Analyze the certification of property ownership and find the exact description of the asset, possible liens, mortgage creditor and any other pending matters.
- Personally visit the property, or at least the building, even if it is currently inhabited, in order to confirm current status of the unit or building as well as be acquainted with the region and market values. Try to find out if the property would be suitable for you and/or be a desirable property for re-sale.
- Try to confirm the debt-related information with the Condominum Administrator and the City Hall.
- Try to confirm the market valuation of the property so that you can plan what will be the maximum amount that you are willing to bid before auction price becomes uninteresting to you.
- Precautions that must be taken when purchasing real estate foreclosures at auction boil down to the verification of past due condominium fees, past due IPTU fees and any other related debts. Concern must also be given that in most cases a property is auctioned without being vacant. If so, you will need to commence the eviction process through the courts.
- It is extremely important to verify all of the different debts or liens the property owner is currently facing so that you are not caught by surprise.
- It is recommended that you hire an experienced licensed attorney that can analyze and assist in the legal procedure as well as verify what risks the purchase may involve.