/

Auction, foreclosures trap doors

1498 views
2 mins read

When you see notices for auctions or foreclosures for the sale of real estate, you can only wonder if the managers, owners, or investors can dispose of these properties correctly.

In many of these ads, there are quite strange things that I have referred to previously, which in many cases, are full of misleading information that could also be considered criminal.

Ads provide a very brief description.

But if the right information is hidden, this is important for the purchase and will mislead the buyer into a wrong decision.

For example, by advertising the sale of a property that has no building permit (so it is illegal), the buyer will find himself tragically surprised.

  • I can recall one case for the sale of an apartment in Limassol, where the unfortunate buyer was not allowed to visit the property, then found that the previous owner had a €15,000 debt for utilities, there were other charges against him and with his purchase, he became the debtor.
  • In a case in Strovolos, the advertisement referred to the sale of a complex of 16 apartments, but the buyer discovered that eight apartments were without a license and could not secure one.
  • Another was a field with road access, but the road was not registered and therefore had no road.

Similarly, the possession and existence of tenants is a serious disadvantage, especially when it comes to statutory tenants, which drastically reduces the property’s value.

Failure to report debts, taxes, utilities, litigation, or non-litigation for the building is a concealment of data, and it is unacceptable not to mention them. In addition, in many cases, the buyer is not offered the opportunity to visit the property.

Not reporting whether or not to pay VAT, using the proviso “possibly subject to VAT” does not help buyers.

Encouraging the buyer to conduct their research is certainly a must, but this does not help the property’s disposal and generation of interest.

All these cases raise doubts that “something is not in order”.

As regards the well-known names of the investment funds and other sellers, in most cases, we observe a disorganisation that does not help their sales.

Some of the funds have a plethora of properties in a wide portfolio, which may amount to hundreds of properties across Cyprus.

But if you are an investor or buyer, instead of these sellers helping the buyer find the right property, they need to learn how to handle the interested parties.

These sellers should classify the properties according to location, type, budget, amount of sale, and something that is not offered.

If you want to buy a property with a budget of, say, €500,000, these sellers should have their properties sorted so that the buyer can be served quickly and correctly.

There needs to be more interest and knowledge to protect the buyer (as opposed to sales by real estate agents governed by the law).

In contrast, if a buyer conducts further in-depth research (e.g., whether the building is covered by the rent, the existence or not of a rental document, and the level of performance), they will discover serious discrepancies.

This weakness of the sellers/managers is to their detriment but also to the debtors, who may be credited with less than they may be able to secure.

And what does the Financial Ombudsman have to say on the matter?

By Antonis Loizos FRICS – Antonis Loizou & Associates Ltd. – Real Estate Appraisers, Real Estate Agents and Real Estate Consultants