Many Russians, in an effort to buy goods at a lower price, begin to look for advertisements for the sale of property that is pledged by the bank. If the borrower ceases to fulfill his debt obligations, the bank puts up for auction the collateralized property that serves as security for the loan. But how profitable is it to buy such property?
How are property taken from bank debtors?
If the borrower does not make any payments on the loan for six months, without responding to requests, persuasions and even threats from the lender, then the bank sues such a debtor. If the court realizes that the borrower does not want or cannot independently resolve the conflict that has arisen between the two parties, then he will take the side of the bank and oblige the debtor to return the loan with property. If the loan was collateralized, then the bank sells the collateralized property and, at the expense of the proceeds from the sale, will return its money with interest. If the loan was issued without collateral, then the bailiffs will come to the borrower's home and take whatever they think is necessary, and if the amount of the debt is too large, then this property may be a house or apartment owned by the borrower. It should be noted that the bank is interested in liquid property that can be easily and quickly sold. Nobody will ask the borrower's consent to alienate this or that property.
To put the collateralized property for sale, a bank does not always need a court order; in some cases, it will only need an executive signature of a notary. On the basis of this document, the bank applies to the state executive service and sells the collateralized property through special trade organizations.
How to buy collateralized property at an auction?
In order to be able to take part in the auction, where the property that is pledged by the bank will be sold, the buyer must pay a registration fee - from 3% to 15% of the value of the property being sold. If, following the results of the first auction, the collateral was not sold, then already at the next auction its price will fall by 15-20% of the initial value. The result of the auction is considered valid only if at least 3 buyers participate in them.
Purchase of collateralized property of banks - possible risks
The undoubted advantage of buying the pledged property of banks is its low cost, but this is perhaps its only plus. This low cost is due to a number of problems that the buyer may have in the future.
When selling residential real estate according to such a scheme, the owner of the home may not know about its sale, and the buyer runs the risk of getting angry residents in addition, who will have to be evicted from the purchased housing on their own. Exactly the same problems can arise when buying a car that was previously pledged by the bank.
When purchasing a car at an auction, there is a risk of receiving a substandard product. To be able to sell a car at an auction, the bank puts it on the wanted list, the traffic police find it, confiscate it and put it in a parking lot, from where the vehicle is sold as it is - without keys, documents and possibly in poor technical condition.
When purchasing the collateralized property of banks, you should be prepared for the fact that you may be left without a purchase at all. So, the borrower can return the collateralized property back if he considers that it was sold at a too low price. Or, for example, the borrower's spouse can challenge the sale of property, demanding part of the amount as alimony, etc. If the buyer loses the property acquired at the auction, then the money spent on its purchase will have to be returned through the court.
