In Mallorca, you can purchase real estate at auction. This can be an alternative to buying a property outright. A few years ago, prices for properties ranging from villas to fincas with extensive plots of land were very reasonable. Today, the island is enjoying increasing popularity among real estate buyers and investors. Houses and apartments are in high demand among residents and high-quality properties are almost only available through professional estate agents such as Neptunus International Real Estate. So a real estate auction in Mallorca seems very tempting, doesn't it? If the economic situation does not allow otherwise, a property auction will be held in Mallorca. This happens faster than you might think, because as soon as the mortgages can no longer be covered by the banks, they apply for foreclosure. The Spanish Enforcement Code (Ley de Enjuciamiento Civil) regulates all the guidelines for this.
But what do you need to know about a Mallorca real estate auction and is the supposed bargain hunting really worth it?
The most important thing about a Mallorca real estate auction
At a property auction on Mallorca, properties on the island that can no longer be financially supported by the owners come under the hammer. The bank initiates foreclosure proceedings for this purpose. This is a cost-effective way for prospective buyers who are considering a house or apartment on Mallorca as a primary or secondary residence to obtain a property. All dates
are available in court and are advertised 20 days in advance in the Spanish Official Gazette of the Autonomy. Since both locals and foreign buyers can participate in a real estate auction in Mallorca, the objects always enjoy lively attention. The significantly lowered prices are undoubtedly attractive. Nevertheless, there are some things to consider at Mallorca real estate auctions. Did you know that if you have a second home as a non-resident, you have to pay a surcharge at the bank on the interest?
This is what you should consider at a Mallorca real estate auction:
- At the public auction you must identify yourself.
- You must accept the terms and conditions.
- A deposit of the appraised value is required.
- If you want to participate in the Mallorca real estate auction and you come from abroad, you need a Spanish tax number (N.I.E. / N.I.F.).
- An inspection is usually not possible in advance.
- An expert determines the value of the property.
- Real estate transfer tax (ITP) is due on the surcharge amount.
- You must pay a registration fee after the auction.
- Maximum 20 days after the auction of the property in Mallorca you have to pay the purchase contract (minus the deposit).
- Pay particular attention to whether the Mallorca real estate auction is a first-ranking or subordinate encumbrance. In the case of a subordinate encumbrance, you also assume the debts that are encumbered on the property. This can quickly become very expensive. In the case of a first-ranking encumbrance, you take over the property debt-free.
Mallorca Real Estate Auction - When did you buy a property at auction?
In a Mallorca real estate auction, the winner is the one who bids at least 70% of the appraisal or auction value, which is considered the lowest auction level. This ensures that the debts to the creditor are paid off. What happens if the highest bid is below that? Then the debtor can appoint a bidder within five days who meets the minimum requirement. In that case, the creditor also has the option of purchasing the property at 70% of the appraised value.
Are there any other alternatives on Mallorca to a real estate auction?
In addition to the Mallorca real estate auction, distress sales are also not uncommon. Especially when the financial situation makes it necessary, sellers have the option to offer a property below market price at a bargain offer on the real estate market, which leads to the fact that the right prospective buyer is found faster. As a real estate buyer, in turn, there is a chance to get a property at a low price.
Also, pay attention to the season. From April to October, the interest in a property on the island is high. If you are looking in the fall or winter, you have a better chance to get a cheap Mallorca property due to the low demand and can sometimes even negotiate lucratively.
Is a real estate auction in Mallorca worthwhile?
It depends. Surely you will often find true gems at a Mallorca real estate auction. But not infrequently many structural defects can be found in the "bargains". Marode objects that have come into the years, usually entail significant follow-up costs, so that the favorable purchase price turns out to be an investment trap. This is not only annoying, but also expensive. Keep in mind that an inspection before a Mallorca real estate auction is not common. At the same time, there are no claims or guarantees. If you subsequently discover construction defects or contaminated sites, you bear the responsibility.
To advertise real estate on Mallorca at an auction should therefore be well thought out in advance. We at Neptunus International Real Estate will be happy to help you and answer all your questions. There are not only attractive properties that you can buy from a Mallorca real estate auction. We have a comprehensive portfolio of high quality properties, which also score with a good price-performance ratio. With us, moreover, there is no need to worry about the quality of the villas, fincas and townhouses, because we only include pre-screened and exclusive properties in our offer. Please feel free to contact us. Together we will find your dream property on the island.
