When a debtor defaults on payments, the creditor files for the judicial foreclosure of the collateral properties. Foreclosed properties are those that are to be auctioned by the courts.
Court auction is a structure where one can buy real estate through the court.
Anybody can bid in silent auctions by the courts.
The highest bidder wins.
The winner, by paying for the property within a period designated by the court, obtains the ownership of the property, by the authority of the court.
Under the improved civil execution or enforcement law, transactions are open to anybody, fair and secure.
Anybody can bid for a foreclosed property in a court auction.
With revised laws in recent years, hurdles for participation are lower than before.
Yet it is still difficult for an individual to go through the process, starting from researching, and bidding, going to the court on weekdays several times, ending in gaining possession of the property often after negotiating with occupants or after some more court procedures.
For secure transactions, we recommend a bidder learn the relevant legal provisions and consult professionals.
Features of court auction
Most significantly, prospective buyers of properties through court auctions may not see the inside of the properties before bidding. One must rely on photographs on the court documents, and the exterior appearances. And court documents are not exactly user-friendly. It may take some effort as well as some research on own, perhaps by visiting some government offices. As the buyer must take full responsibility, the buyer must have good knowlege of real estate, and real estate transactioin. On the other hand, one may be able to acquire a property at cost lower than in the general market.
Buyers also should budget various expenses involved, which may differ from one case to the next, on top of the bid price. Engaging services of support company may be an option.
How much are they?
They vary. Most of buyers now are companies, in real estate business, for reselling, so the prices are generally lower than the regular markets. Yet prices are not as low as used to be, particularly in the Tokyo region. So a buyer must be selective.
Can I get a mortgage or real estate investment loan even for a property bought in court auction?
Some general members of 981.jp have actually drawn loans to acquire properties through court auctions. Banks as in ordinary sales ususally require involvements of real estate agents, so to obtain loan you practically need to engage an auction concierge who will as an expert also help you obtain the loan. While regional banks and credit unions are more eager to lend, one option may be to use so-called non-banks for bridge finance. It is most important to get the fund or financing ready before bidding. And it is probably wise to engage an expert agent.