Last update12:12:22 PM

Back You are here: Home Legal and Finance Finance Bulgarian Property Sales by Public Auction

Bulgarian Property Sales by Public Auction

What are public sales? The answer to this question is really simple.

When a client is incapable of paying off his mortgage, the bank takes advantage of his right to gain ownership over the mortgaged property and sell it. These sales are publicly announced and have specific execution procedure.

This poses the question- why should one bother going through the process and the paper work in order to buy a property, when it is a lot easier to just visit a real estate agency and pick out the best offer? Probably the different procedure and the uncertain outcome of the auction are the reasons why public sales are not so popular among buyers. But if one takes a closer look at the offers, one will realize that they are more competitive in terms of price than any other on the real estate market.

The bank's main purpose is to cover the outstanding loan, that is why it sets the latter as a basic price and this is in most of the cases, below the initial purchase price of the property. One advantage is that the participants in the auction are the ones who define the final price of the asset and it is exclusively up to them how much they will pay at the end. The owner becomes the one that makes the highest bid, which can still be below the current market price of the property.

Below is enclosed some basic information about the procedure and the conditions for participation in public auction:

Who are the participants? These are any physical or juridical person who is allowed to participate in a public sale, personally or via proxy. The ones who are not allowed to participate are the debtor and their attorney, as well as all the assistants of the executive magistrate

How to make a bid? The procedure is with secret making of bids. One can make his bid from the first date of the auction until the end of the last day by sending the documents to the district court on the location of the property. There is an obligatory deposit that has to be paid beforehand, which amounts to 10% from the minimum price of the property stated in the classified. Those of the participants, who are not pronounced as the new owner, can draw out their deposits immediately after the announcement of the winner by writing an application.

When the bids will be considered? The consideration of the bids begins at the stated date and time at the district court. After determination of the highest bid, the participants, who are present may continue bidding and the one who makes the highest bid is to be pronounced as the buyer of the property. However, the presence of the pronounced buyer is not obligatory.

Closing the sale? The buyer, after being pronounced as such, has a period of 7 days to pay the difference between the price offered and the initial deposit of 10%. In case the buyer does not pay the rest of the funds within the specified period, the former loses his deposit and the participant with the next highest to the first offer, who has not drawn out his deposit, is invited to become the owner.

If the process looks too complicated and any thought for participation in public sale has vanished, just bear in mind what the statistics show about the public auctions:

Apartments on the Black Sea Coast in 5 star complexes are offered at a price in the range of 250-300 EUR/sq.m.
Apartments in hotels in Bansko, one of our best ski resorts- can be bought for 300-350 EUR/sq.m.

Pretty attractive, isn't it?

Please, note that the experience of the consultants in the filed shows that the initial price the sale starts at, could increase by 15-20% by the end of the process.

So if you are interested in acquiring property in Bulgaria, why should you pay more when you could buy a unit at a lower price from a public auction.

Warren Buffet advices: "Rule 1- never lose money. Rule 2- never forget to obey to rule 1."

Written by Home Point BG