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The pitfalls of buying real estate from an electronic bankruptcy auction

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On the Internet, advertising of “wonderful” video lessons is often found, after listening to which you can learn how to acquire various property from electronic bankruptcy auctions.

Their creators promise that people who buy the course will be able to receive hundreds of percent of the net profit from each purchase and will easily navigate all the intricacies of this difficult process. But in practice, everything is much more complicated. Let’s see what is needed to participate in such auctions and what difficulties their participants may face.

What is an electronic auction for the sale of seized property

The form of electronic auctions for the sale of debtors’ property is provided for by the Federal Law “On Insolvency”. This type of auction is held on a special electronic platform, of which, as of 2013, there were already 48 in Russia. Bids and price offers of participants are accepted remotely. All bidding documentation has also been converted to electronic form.

In Russia, the most famous electronic platforms where auctions for the sale of seized property are held are: “Fabrikant.ru”, “Sberbank AST”, “Realization Center” and Electro-torgi.

The likelihood of any violation of the rules and infringement of the rights of the auction participants depends on who in each particular case will be the organizer of the auction, what property will be displayed, whether any of the participants will be able to find an approach to the organizer and other similar factors. Therefore, it is simply impossible to calculate the reliability of any of the sites..

What is required to participate in electronic trading

Anyone over the age of 18 can try to acquire seized property in this way. To do this, he needs to obtain an electronic digital signature, register on the electronic platform where the auction will take place, and send a completed application for participation with a package of necessary documents to her email address. Next, the deposit is made, established by the rules of the auction.

Nuances of electronic bankruptcy auctions

Of course, it is incredibly tempting to buy property at a price much lower than the market price. But it’s not that simple. Bidders face a myriad of challenges and obstacles. Let’s consider the most common ones.

Often, the lucky winner of the auction, who bought residential property at a very low price, discovers that minor children are registered in it or that engineering communications are damaged and require expensive repair.

The pitfalls of buying real estate from an electronic bankruptcy auction

To avoid such situations, it is necessary to spend time in order to obtain information in advance about the technical and legal condition of the object put up for auction..

Fake participants

It happens that dummies take part in the auction, the purpose of which is to inflate the price of the lot to sky-high heights in order to prevent real buyers from buying it, and then refuse to conclude a sale and purchase agreement, thereby making the auction invalid.

Uncleanliness of the auction organizer

Sometimes an unscrupulous bidder acts in the interests of one of the participants. He can conduct an auction on the day of its announcement, so that most potential buyers do not even have time to submit an application, arrange a DoS attack at the moment of a critical price reduction for the desired lots, or go for other fraudulent tricks so that the participant he needs is recognized as the winner..

Difficulty filling out documents

A huge number of potential buyers of seized property are eliminated at the stage of filing an application for participation in the auction. Therefore, it is necessary to pay maximum attention to this aspect:

  • get acquainted with the regulations of the electronic platform;
  • provide the documents required for the application, completed in full accordance with the rules of the auction;
  • send a scan of the document certifying the payment of the deposit.

Any mistake in filling out the documents or violation of the site regulations are grounds for refusal to register as a bidder.

Thus, the electronic auction of seized property can be a very profitable way of acquiring real estate. But the people who elect him need to think carefully about whether they can get around all the pitfalls that exist..

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Comments: 1
  1. Skylar Campbell

    What are some key factors to consider or be cautious of when purchasing real estate through an electronic bankruptcy auction? How does the process differ from traditional real estate transactions, and what potential pitfalls should buyers be aware of? Is there any due diligence required to ensure a smooth outcome?

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