Domus Optima Distressed Real Estate Auction Basics
Domus Optima’s Distressed Real Estate Auctions (Type D) are specifically tailored to auction all kinds of real estate properties that are in a state of foreclosure, financial or other distress.
The sale of a distressed property is initiated by a third party in order to recover an outstanding debt or financial / legal obligation, and is not voluntary on the part of the property owner.
Auctions may successfully be used in the following most common cases of the distressed property sale:
- Foreclosure. This occurs when a homeowner defaults on their mortgage payments, and the creditor initiates legal proceedings through the court system to take possession of the property and sell it to recover the outstanding debt.
- Power of sale. This is a legal provision similar to foreclosure that allows a creditor to sell a property in the event of a mortgage default to recover the outstanding debt, but without court intervention.
- Forced sale. This occurs when a court or other legal authority orders the sale of a property in order to satisfy a debt or legal obligation of the property owner.
- Tax sale. This occurs when a property owner fails to pay their property taxes for a certain period of time (two years or more). The municipality then has the right to register a Tax Arrears Certificate against the title of the property. This allows the property to be put up for sale one year after the registration of the Tax Arrears Certificate to recover the unpaid taxes (unless they are paid off in full by the owner or another interested party, such as a lien or mortgage holder).
Domus Optima Distressed Real Estate Auctions provide a transparent, fair and open online auction environment which allows:
- institutional, corporate or private creditors to recover the unpaid debts;
- municipalities to recover the unpaid taxes;
- buyers to purchase a real estate property at or potentially below market value.
Domus Optima’s Distressed Absolute Real Estate Auction (Type DA) represents a variety of the most common English type of auction, where a real estate property is sold at or above the auction Starting Bid without reserve (regardless of the bid amount) to the highest bidder.
All bidders compete on the SAME auction terms and conditions by submitting their ascending bids online with pre-defined bid increments and auto-extending auction closing time (soft closing).
Domus Optima Distressed Absolute Real Estate Auctions (Type DA) usually incorporate Buyer’s Premium instead of Seller’s Commission along with other specific terms and conditions required for auctioning of the distressed property by currently in force law(s).
Domus Optima’s Distressed Sealed-Bid Real Estate Auction (Type DS) is an effective public method of real estate selling in which all bidders compete on the SAME auction terms and conditions by submitting their single sealed bid online, so that no bidder either knows the amount of the competing bids or has opportunity to revise the bid amount. The sealed bids are not disclosed to any party until the end of the auction.
A reserve price in the Type DS auctions equals to the starting bid amount set by the seller. If the reserve price is met, the highest bidder is declared as the winner of the auction.
Domus Optima Distressed Sealed-Bid Real Estate Auctions (Type DS) usually incorporate Buyer’s Premium instead of Seller’s Commission along with other specific terms and conditions required for auctioning of the distressed property by currently in force law(s).
Please find below a simplified flow chart of the Domus Optima Distressed Real Estate Auction:
The seller (municipality, institutional, corporate or private creditor) fulfils all legal formalities to obtain ownership and/or legal right to sell a distressed property, and submits Auction Services Request via our online form.
Upon obtaining available property information / reports, as well as the completion of all Domus Optima Distressed Real Estate Auction (Type D) listing formalities, all auction terms are set. The seller’s property is then listed for the upcoming distressed auction on an ‘as-is’ basis.
Please note: In case the seller prefers to use services of their real estate agent in the sale of the distressed property, the property will be auctioned either via Domus Optima Absolute Real Estate Auction (Type A) or Domus Optima Sealed-Bid Real Estate Auction (Type S).
Potential buyers (along with their cooperating agents / brokers, if any) seek legal counsel, complete their due diligence, obtain finance pre-approval (if available and required), and register to participate in the upcoming Domus Optima Distressed Real Estate Auction. While registering for the auction, potential buyers are encouraged to pre-authorize the Auction Administrative Fee amount stated in the auction listing.
Domus Optima Distressed Real Estate Auction starts on the advertised date and time.
Registered potential buyers submit online either their single bid (Type DS) or ascending bids with pre-defined bid increments (Type DA) at or above the Starting Bid amount on the SAME auction terms and conditions.
If a bid is placed within the last 3 minutes of the Distressed Real Estate Auction, the closing time will be automatically extended for an additional 3 minutes to allow for other bidders to have a fair chance to compete (soft closing).
At the auction closing time, the bidder with the highest bid wins the Distressed Real Estate Auction.
All Auction Administrative Fees of the non-winning bidders are waived and their respective pre-authorizations are cancelled/released.
The winning bidder provides the deposit set by the seller, a Buyer’s Premium stated in the auction listing and fulfills required legal formalities.
The balance of the winning bid amount is due by the property closing date.
The winning bidder is responsible for the payment of all its closing costs, including, but not limited to Land Transfer Tax(es), Legal and Government Registration Fees, etc. In some cases, for example, during a tax sale the winning bidder may also become responsible for any existing liens or other claims on title of the distressed property.
On the property closing date and upon fulfillment of all legal formalities, the ownership and possession of the property is transferred to the auction winner, and the seller receives proceeds of the sale.
Upon successful closing, the Auction Administrative Fee previously pre-authorised by the buyer is waived and its pre-authorization is cancelled/released.
Commission is paid to the cooperative agent, if this agent had been officially appointed during the registration for the auction.
Benefits of Domus Optima Distressed Real Estate Auctions:
Domus Optima Real Estate Auctions Basics: