Hello everyone,
I am interested in a house that is going to be auctioned off. It is the auction of the Goslar District Court on 7.7.21 with the file number 11 K 1/19. (If links are allowed, I will gladly link it as well).
In my opinion, the property is a real gem, which will certainly, with very, very high certainty, attract a huge number of interested parties and drive the price up terribly. Expect to easily pay the "normal" market price. If you are still dreaming of a bargain here, better stay at home (no, actually better not, take a look at it). Although: if you buy it at the foreclosure auction, you will at least save the realtor’s commission and also a bit on notary costs.
You’ve probably already made the first mistake by advertising the property here ;-) and possibly awoken sleeping dogs. After a quick glance over the appraisal and the other pictures, my tip would be that it will fetch 400K€+ at auction. The thing is well insulated, has triple-glazed windows (!), a backland plot (I find that TOP), underfloor heating, a newer gas boiler, 2 separate apartments, and even a NUCLEAR BUNKER (I can’t believe it *lol*), a garage with a pit, etc.! The property is really great, someone lived here who valued the house. If it were in my area and I hadn’t found anything yet... you would have found a co-bidder... that could be your chance... maybe...
The 2019 appraisal of the property states a higher market value than the announcement for the foreclosure auction. Does anyone know why that could be?
Because you looked up the wrong file number! The announcement for your property states the correct value!
Since the current owners are an inheritance community, I assume the house has been vacant in the meantime—could the price difference be related to this and any potential damages that may have occurred (e.g. frost damage in winter)?
No, see above. The market value appraisal should ideally include all defects, etc.—that’s what it’s for.
You can't really check more than the appraisal, possibly the building file or land registers. Exterior inspection and location. Then set a suitable limit assuming that you will still have to invest quite a bit into the house.
Strangely, the property is listed on an online real estate portal with older pictures (where everything was still cared for), but also from the inside!
You don’t want to jump in cold, do you?
Why shouldn’t he? Everyone has a first time...
Of course, it would be wiser to watch some auctions beforehand to see how it all works.
Is the financing secured?
That definitely should be clarified beforehand up to the maximum (realistic) limit. My experience shows banks get quite annoyed when inquiries about foreclosure properties come in, because the probability is quite low that the inquirer will actually get the place (especially if one still thinks they can bid at market value).
About our target bid. It is above the market value. Comparable houses have recently been listed rather in the range of 300k€ to over 450k€. But that would be too expensive for me... So let's see.
Then you can probably forget it, but report back for sure how much it finally went for! I consider 400K€ realistic and still a bargain.
I estimate the costs for a complete renovation, in my opinion generously, at 200K€ and have factored that into my financial capacity. I have read the appraisal (now even fully ... shame on me).
?? What do you want to renovate? The floors are mostly TOP. With this property, you don’t have to do much and can move in. Bathrooms, water pipes, garden back in shape, that would have been it.
A foreclosure auction is like a blindfolded poker game. A limit alone will only help you to a limited extent as a greenhorn. Therefore, I strongly advise you here,
1. not only to consider your limit but also to place only ONE bid, in this case close to the starting price;
2. absolutely complete half a dozen practice occasions: auctions where you can participate completely without interest and thus emotionless and also practice assessing the other bidders.
Almost for the sole reason that you won’t have enough time to practice before this auction, I advise you to "lose" this property. It will be worth it at the next opportunity.
And: read through my Barthel tips here and "learn" to buy actively. Passive buying is for losers (or those who want to become one).
Well, I can only partially agree with that. Everyone is a greenhorn at some point, which is why he asked here for tips. The offers at foreclosure auctions are so terribly different that in my opinion you can hardly "gain experience," because it always turns out differently than you think. And "practicing" at other auctions? Bidding without interest? In the end, he might have a dilapidated property he never wanted. Only submitting one bid close to the starting price? Then he might as well skip the visit and the money transfer. Sure, if there were enough foreclosure offers in the pool and if you had all the time to go through all auctions (I have endured quite a few), you get fleeced and from my experience the "risk appetite" actually rises. At the start, the "greenhorns" still think: "Market value 7/10, I’ll take it."
If a property meets all needs and expectations at the foreclosure auction, you can also be mad as hell in the end if you didn’t take it.
So here are my experiences from various foreclosure auctions:
In the course of my search, I have looked at several foreclosure auctions and developed a feeling for what good properties are, what is worth the effort, etc. I can also read appraisals properly. You have to really study beforehand. No pain no gain here either.
1st tip: The big frustration:
99% of the really good properties don’t even get to the date and are sold beforehand. The few that go through are the really "hot stuff." So first look at the file number, proceedings with an old year can usually be forgotten because something always comes up (someone files a complaint, the debtor pays at the last minute, etc.). Furthermore: if the debtor still has some leeway and realistically assesses his situation (and not "you’ll only get me out of here dead") he will not be opposed to purchase offers beforehand. That’s why the tip is to try to get the property by approaching the owners, just like other interested parties. Conversely: find out the reason for the auction: "dissolution of community" can mean inheritance community (that is generally good because the heirs apparently couldn’t agree or a prevented heir is represented and therefore the auction is carried out). With divorce auctions, you can forget it... always expect to waste a lot of time without results.
2nd tip: Verify the appraisal:
Even appraisers can be wrong. Examine every appraisal closely regarding market value. I myself have seen such different valuations from the same appraiser that I rubbed my eyes at times. Sometimes this can mean "luck" if co-bidders orient themselves too much to a (possibly) too low market value. I’ve also seen prices according to appraisers where I wouldn’t have bid half, so knowledge is power. The more information you have compared to other bidders, the better.
3rd tip: Don’t fixate, or maybe do fixate:
Well, if you go in thinking "nothing will come of it" or "there are plenty of other properties," you might as well forget it. On the other hand, be careful not to want a property so badly that you lose all reason. But if you find your "dream property" at a foreclosure auction, why not go all out within what is still feasible? If everything fits? Nothing is more annoying than being outbid by 500 € and then regretting it because maybe you could, should, or would have bid more...
4th tip: Courage to take risks:
As Olli Kahn once said: "We need balls." Anyone going to a foreclosure auction should be aware that they are risking quite a bit (no internal inspection, appraisal is older, in the meantime, a junk collector might have gone through the house, the current owner might blow himself and the property up, etc.). If you are rather cautious: stay away.
5th tip: The house from the foreclosure auction:
If you buy such a house, be aware that you might be the one in the neighborhood who bought the shack from the beloved neighbor and on their "misfortune," every neighbor is well informed and everyone knows how much you paid.
6th tip: Women in the kitchen:
Or men, as you like. But seriously, in my experience couples hinder themselves at auctions because despite prior arrangements, contradictory behavior occurs. I have observed this repeatedly. In the middle of bidding, they discuss, deviate from the previously established bidding strategy, calculate back and forth on a piece of paper (which is a revelation for the other bidders). One decision-maker!
7th tip: At the auction:
Depending on the property, you have many different people on site. There is the "hammer-downer," who seeks conversations with bidders everywhere to put down the property. You shouldn’t let yourself be influenced by them. A sensible strategy would be, in my opinion, to keep quiet in the background, not stand out, keep a poker face.
My property comes from a foreclosure auction. Buying a house there just fits me. Since childhood, I have been more of a risk type. My third car as a student, for example, I bought at a tax office auction. I also attended various pawn auctions and had a few bidding battles there.
Now, the procedure is as follows: The court officer reads aloud all the formal stuff. Ears perk up here and there to check if there are any existing rights that would have to be considered in the bid amount. Then the so-called "bidding half-hour" starts; during this period, the first bids are given, but not tallied yet. At the first bid, personal data are recorded, the check or transfer confirmed, the court officer then publicly announces, "Mr./Ms. XY bids X €, is a security deposit required (to the creditor requesting it)?" This is usually confirmed, and then the check is collected (speaking of checks, once was enough: the check must be issued by your own bank, it is like cash (so do not shred it after the auction, then the money is lost), it also costs fees. Once I almost was late with the check, so better transfer; you get the money back eventually).
If you are superstitious: NEVER place the first bid! No first bidder has ever won an auction. Also, you out yourself as "really hot on the property." Just start as second or third. Then place a minimal bid, the lower here, the better (maybe) for the later bidding battle. And now: shut up, no more bids, wait for the end of the bidding half-hour. Keep feet still. Ideally, only one more bid would be necessary now: the winning bid. When the bidding battle ends or the highest bidder is counted off "First, second, third," ONLY THEN do you place the second bid (only if you’re still within your price range). Initially, steps of 500 €, depending on the property, the amount, and the behavior of the last co-bidder, sometimes a bigger jump, e.g. 5000 €. If it then works, congratulations or condolences, depending on how the house actually stands. I consider this ambush bidding strategy more effective than bidding from the start and revealing yourself completely (in the short time you get to know the people pretty well).
"My" auctions:
I accompanied several foreclosure properties, some just to look, some with half interest, some with real interest. Some properties still went for good prices. I already had a dream property in sight before my current hit: a 70s bungalow (market value 238K€) in prime location with significant renovation needs. The "problem" was 2 owners, one wanted to sell, the other had taken up residence in the hut and paid nothing. I wasted tons of time, contacted both owners, spoke many times with one owner, without result. A pre-purchase was thus not possible. Then the property was taken off 4 days before auction, that hit hard after a year of effort and hope... I had tried further to buy it, but when the direct neighbor listed his bungalow for 550K€ and it actually sold after a while... that spoiled all negotiations for me...
Some time later a really hot item came into the foreclosure pool. Same location as the bungalow, just double the plot and a two-family house. I thought it was probably too much and would blow up, if it even came to auction. Usually, such properties are caught earlier, so I initially dismissed it as "nice, but nothing will come of it." Here, however, the debtor had flown away (had absconded) and debts for a sale were much too high for any creditor to approve. The property went through, and the turnout surprised even me. So many people I hadn’t seen before at any auction, about 100 (?) crowded despite Corona (a month/weeks later the court officer would definitely have stopped because no distancing was observed). At the end, I bid slightly over my limit and won about 26 % over market value. During taking possession (since it was backland, you couldn’t see or inspect anything) I got quite scared. Leakages in the roof according to appraisal were quickly fixed, mold according to appraisal was rather mildew stains, overall pleasantly surprised again, did everything right!
So, report back how it went....