Economy

How to buy property at auction with up to 50% discount

Many people are unaware of this alternative, which can guarantee discounts of up to 50% on your property purchase. Learn more now!

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Buying a property can be a big challenge, especially with the high prices of the traditional real estate market.

However, many people are unaware of an alternative that can guarantee discounts of up to 50%: real estate auctions.

Real estate auctions are an opportunity for those looking to purchase a house or apartment at below-market prices.

Whether for living, investing, or reselling, this option can be highly advantageous, as long as the buyer understands the process well and avoids pitfalls.

What is a real estate auction?

Real estate auctions are events where properties are sold at reduced prices, usually due to debts or defaults by previous owners.

These sales can be organized by banks, financial institutions, city halls and public bodies.

There are two main types of real estate auctions:

  • Judicial auctions – They occur when the property has been seized due to legal proceedings, such as default on financing or taxes.
  • Extrajudicial auctions – Carried out by banks and financial institutions when the owner does not pay the financing installments.

Both offer discounts that can reach 50% of the market value, making it an excellent opportunity for investors and buyers interested in saving.

How does the sale of properties at auction work?

Auctioning property occurs when properties are made available for bidding, usually due to default. This method allows for the purchase of properties at reduced prices, making it an attractive alternative for investors.

Unlike the traditional market, used property sales at auction may involve occupied properties or properties with outstanding debts, requiring buyers to carefully review the notice before placing a bid.

With the advancement of technology, online real estate sales have become popular, allowing buyers to participate in auctions without leaving home. Specialized platforms offer filters by location, property type, and value.

For those looking to buy off-plan properties, auctions aren't the ideal option. However, they are advantageous for those seeking opportunities in ready-to-move-in properties, whether for housing, resale, or rental.

How to participate in a real estate auction?

The process for participating in a real estate auction is simpler than it seems. Here's a step-by-step guide:

1. Choose a Reliable Auction Platform

Auctions can be held in person or online. Some of the main real estate auction platforms in Brazil include:

2. Read the Auction Notice

Each auctioned property has a notice, which outlines all the rules, payment terms, and potential debts. This document is essential to avoid unpleasant surprises.

3. Bid and wait for the result

During the auction, participants place bids starting from a stipulated minimum amount. The highest bidder wins the property.

4. Make the payment and register the property

After purchasing a property, the buyer must make payment in accordance with the auction rules and register the property in their name.

Advantages of buying property at auction

Real estate auctions have several advantages for buyers and investors:

  • Discounts of up to 50% – Prices well below market value.
  • Great option for investors – Possibility of reselling or renting with high profitability.
  • Fast process – Unlike traditional purchasing, where there is bureaucracy, auctions guarantee speed in acquisition.
  • Opportunity to acquire appreciated properties – Many auctioned properties are in prime locations, increasing their potential for appreciation.

Main risks and precautions when buying at auction

Despite the advantages, buying a property at auction requires careful consideration to avoid problems. Here are the main points to consider:

1. Debts and Occupation of the Property

Not all properties auctioned are vacant, and this can be a challenging issue for the buyer.

In some cases, the former owner or tenant still resides in the property, making it necessary to file a legal eviction lawsuit, which can take time and generate additional costs.

Therefore, before bidding, carefully review the auction notice to check for outstanding property tax (IPTU), condominium fees, or unlawful occupation.

These factors can impact the final cost and require legal measures for regularization.

2. Renovations and Property Condition

Some auctioned properties may have structural problems, such as leaks, damaged wiring, or the need for major renovations. These repairs can be costly, reducing or even negating the savings obtained at auction.

Additionally, depending on the condition of the property, a lengthy period of renovation may be required before it is ready for use or resale.

Therefore, whenever possible, try to visit the property before the auction or request detailed information about its condition.

If a visit is not permitted, review the photos in the notice, search for previous records, and consult experts to estimate potential renovation costs.

3. Payment Requirements

Real estate auctions often have strict payment rules, requiring, in most cases, cash payment or limited financing conditions.

Unlike traditional purchases, where there's more flexibility for installment payments, some auctions don't allow bank financing, requiring the buyer to have the full amount available in a short period of time. This can directly impact your ability to purchase the property and compromise your financial liquidity.

Therefore, before participating in an auction, carefully check the notice to understand the accepted payment methods.

Make sure your financial capacity is compatible with the auction requirements, avoiding unforeseen events or difficulties in paying off the property.

To help you with your questions, we've put together some frequently asked questions about property auctions.

Clarify your doubts below – Source: Canva.

Here are some common questions about buying property at auction:

1. How can I find properties at auction?

The best way is to access specialized platforms, such as Zukerman, Sold, and Leilão Caixa, where you can filter properties by city, price, and auction type.

2. Is it possible to finance an auction property?

Yes, but not all auctions allow financing. Some auctions require upfront payment, while others offer installment options or bank financing.

3. Can I visit the property before the auction?

It depends on the auction. Some allow in-person visits, while others only provide photos and descriptions.

4. What if the property is occupied?

The buyer may need to file an eviction lawsuit in court, which can take several months.

5. Is there a risk of losing the property after the auction?

If the auction was conducted correctly, there's no risk of losing the property. However, it's crucial to check for pending legal proceedings.