Italian Foreclosure Deals
La sofferenza bancaria che si traduce in opportunita’ di investimento.
An important lever on the resumption of trade is generated by the real estate auctions, given that the average spread between the initial survey and the final price came to 45%, due to the crisis: more and more properties end up in court auctions, accumulating those who so far have not found a buyer. Every time an auction goes empty, the judge lowered the price. The average discount between the initial evaluation of the court expert and the final price was 15% in 2007 (the last year before the crisis), but gradually increased to 30% in 2010 and 45% in 2012. There is some geographic variation: the islands and Calabria discount up to 55%, while in the North and in large cities, including Rome, it drops to 35% due to the presence of the most liquid markets (source:2/14 Idealista.it) Unfortunately, the world of real estate auctions is not practically accessible to all people, in theory everybody could participate, but there are several specific factors that adversely affect the closing of the deal, which we will clarify over the page.
In this particular historical moment, Italy is facing a relatively new term that opens many investment contexts particularly advantageous. One of the factors with the greatest impact is own suffering related to Real Estate Banking: banks possess thousands of properties detected by enforcement procedures, as happened in Florida a few years ago, but in the "State of the Sun shining" banks and real estate market have followed a different way , linked to particularity of the territory and of the legislation (have a look to " Why Investing in Florida").
In Italy, however, this situation limits the range and operability of the banks because of their cash needs: property enforcement procedures are not yet widespread among the common people and obscure the majority of small and medium investors, because the apparent hostility to recover the information (think that some courts have recently opened online portals only for consultation), as well as bureaucratic delays that occur as the first card of a real estate auction in Italy.
So why it should never turn into an investment opportunity?
Simple: the Italians are used to buying their home for life (think that 80 % of properties in Italy are the own property) and it should reflect all the characteristics and needs of the buyer. This process of careful selection is not very fast due to the search for fine and exclusive details. We refer to insights in the blog, but the formal procedures, in few words, is a real challenge unnerving the first time: advertising is hard to find, photos are not present, difficulties to visit the property ( in Italy is allowed a prior visit), ordinances unclear, complex tendering procedures and, finally, the almost total difficulties access to credit to purchase a property at auction.
This difficulty to partecipate of small and medium investors turns into a great opportunity, due to two main reasons:
1 ) The auctions often go empty and the price continues to fall;
2 ) Based on years of real estate experiences on auctions, the purchase of a property happens in anticipation of the normal process of public auction ( with all its difficulties and procedures) , resolving the issue "debt" directly with the creditor (in most cases, the Bank) and then drastically disrupting the enforcement proceedings open right from the creditor to collect his credit.
In this way timing is drastically reduced and in some cases are even faster than a normal sale (average 45 days). We talked about the procedure called in technical Italian jargon "Excerpt Real Estate", that is similar to the REO but it’s not the same.
Invest with us
For more informations visit our Blog, contact us in real time or send a fast free request.