I attended Unionbank’s public auction of foreclosed properties yesterday and I would like to share some highlights of the event.
I arrived early and was waiting for the auction to proceed when I was pleasantly surprised to see familiar faces – fellow real estate investors – who started to arrive. It’s really nice to be around like-minded and successful people whose success we all would want to emulate. We got to chat with each other before and after the auction.
In his introduction, a Unionbank representative noted the said auction was the 131st auction conducted by Unionbank. The first auction was in the year 2000. From these auctions, they have sold more than 1.5 Billion worth of properties. I noted that this points to an average of about 11.4 Million pesos worth of properties per auction – a very small average if you ask me, as each auction would easily have more than 100M worth of properties up for sale.
Auction rules were then discussed and one thing I noted was that Capital Gains Tax (CGT) and Documentary Stamps Tax (DST), were both for the account of the buyer. This can have a significant impact on the cost to acquire a property in addition to the selling price. As promised, I will be posting an article on these taxes soon. This article was written by my wife who is a CPA-Lawyer and I just need to edit it a little so that it would be easily understood by laymen.
Out of more than ninety properties up for auction, only four properties were sold, and three were sold for the minimum bid price. As predicted, one particular property’s winning bid was significantly higher than its minimum bid price, an increase of Php750,000.
I asked the bank officer what would happen to the unsold properties and he said interested parties can submit their best offers, subject to review and approval of the bank. Here’s a big opportunity to get bargain real estate investments but investors must submit offers soon. I believe that these will eventually be up for auction again as Unionbank conducts these auctions regularly.
For this particular auction, I did not want to bid on any property as I was unable to inspect any of them. This was also the same advice I got from Kim, the bank officer who handled most of the properties. He said they discourage buying properties without first inspecting them. Nevertheless, I was allowed to stay to watch the auction proceedings provided I register and register my show money, which I did. By the way, I advice future attendees of auctions to make sure you bring Managers’ Checks (MC) instead of cash for your safety and convenience.
There you have it folks, feel free to comment if you have any other questions regarding the auction. I hope to see you in the coming auctions.
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