Real estate auctions attract Czechs with low prices
As Radio Prague notes, when buying an apartment at auction, there is no need to pay brokerage fees for real estate agencies, which can reach several hundred thousand crowns. This is one of the circumstances explaining the fact that, for example, in Prague, the number of participants in "auction battles" for panel apartments has doubled over 5 years. The main role, however, is played by the reduction in mortgage rates. Today, banks can offer new clients a rate below 2% per annum.
"Mortgages are in first place. Most auction participants buy apartments directly for themselves. They are able and must contribute part of the price of the purchased housing, relying on their own savings. The larger part of the apartment price, more than half the cost, they repay through a mortgage loan. Today, mortgage loans have become accessible even to those segments of the population that previously could not even think about them," comments commercial director of Naxos, Libor Nevšímal.
Even more in demand than old panel apartments at auctions are garages in bedroom communities, where parking difficulties are observed. The desire to secure one's car from break-in or theft also plays a significant role. A garage is also a profitable investment if rented out.
Participation in forced auctions is also popular among potential real estate buyers, when the property of owners burdened with debts and unable to repay them on time is put up for auction. Creditors prefer this route because it is the fastest way to recover their funds. Last year, almost a thousand forced real estate auctions took place. Four years ago, there were three hundred fewer. "Real estate can be bought very profitably at such an auction. The starting price usually starts at 50% of the value determined by the appraiser," emphasizes Simona Krejčová, a representative of Eurodražby.cz.
The low price may cause potential problems with taking actual possession of the purchased property. The former owner, for example, may refuse to move out of the apartment, and then the new owner will have to make additional efforts and invest funds. Legal proceedings with tenants refusing to move out can drag on for several years.
Many auctions featuring apartments and houses are now held online, which saves time and limits the possibility of trickery. "The possibility of intrigue during the auction completely disappears. The fact is that participants do not know who they are up against, how many participants were registered, what their numbers are. The possibility of influencing the course of the auction disappears," adds Simona Krejčová from Eurodražby.cz.
Online real estate auctions today are as safe, experts say, as conducting banking transactions through electronic systems. All money transfers are recorded. The amounts paid for purchases are not sent directly between sellers and buyers, but go through the auction organizer's account.