How to buy a foreclosed house?

Looking to buy a house with a mortgage loan and gathering information? Save time and contact the credit intermediaries Poupança no Minuto directly to clarify all your doubts. If you want to know more about foreclosed houses, we explain next.

What is a foreclosed house?

A foreclosed home is a home seized by the state, bank, or other institutions due to outstanding debts by the owners. However, since it can also be an expense for these entities (due to maintenance, condo fees, etc), and not a source of income, they put it on the market.

Therefore, a foreclosed house can be a good option for those who want to buy a property at a lower price, as entities are not interested in keeping it. You can also buy a property with 100% financing, in the case of properties foreclosed by banks, as they are considered disinvestment properties.

You can find repossessed houses for sale in public entities, such as the Tax and Customs Authority (AT), the Social Security and on auction sites, and in private entities, such as banks. Each entity has its own specificities. In addition, buying a repossessed house has both advantages and disadvantages, as we will see below.

Where to find houses pledged for sale?

So, you can find foreclosed houses to buy at the following entities:  

• Tax and Customs Authority (AT - Finance Portal);
• Social Security
• City Councils
• Fast Portal
• E-auctions;
• Banks.

Tax and Customs Authority (AT - Finance Portal)

Houses seized by the Tax Authorities can be sold through online auction, closed letter proposal, or private negotiation.

In the online auction, the candidate has the option to "join the auction", with 15 days to submit a proposal, which must correspond to 70% of the Property Value.

If there are no proposals in the online auction, the closed letter proposal phase begins, with proposals of 50% of the VPT being accepted. In this case, the deadline to submit a proposal is between 15 and 20 days, at the tax enforcement body of the sale.

In the private negotiation, the sale is carried out by mediators, and the candidate must choose to select the property in private negotiation and choose "Submit Proposal," where they will have the contact of the responsible mediator.  

Social Security 

The Social Security is another entity that sells seized properties. In this case, the proposal must be made by sealed letter sent by mail to the coordinator of the process section with the property in question, the price you propose to pay (it must be at least the advertised value), and the identification and signature of the applicant. Then, the property is sold to the highest bidder.

In the case of extrajudicial sales, there is also progress towards private negotiation, through a negotiator or mediator.  

Citius Portal

The Citius portal is a website that aggregates several confiscated assets for sale. In other words, here you can find various properties, advertised with their characteristics, sales method, and the execution agent responsible for each process. The proposal to be presented will depend on the method in which the house is for sale.

E-auctions 

The e-auctions is a website created by the Order of Solicitors and Enforcement Agents where you can find seized assets for sale in online auctions.

On this platform, it is possible to submit a proposal to buy a foreclosed house, using the digital certificate from the citizen card or mobile digital key.

Banks 

Banks also hold foreclosed properties, which were given as collateral for housing loans. When a borrower defaults on their home loan payments, the bank can seize it and put it up for sale.

To buy a bank-foreclosed property, you can check the available options on the banks' or real estate agencies' websites.

Buy a foreclosed house: Because I want to and because I don't.

Advantages 

Buying a foreclosed house has the great advantage of the cost being much lower. In public entities like the Tax Office, the VPT can decrease between 30% to 50%, a much lower value than other houses in the market.

And in houses pledged by the bank itself, the housing credit conditions can be more attractive, with the possibility of obtaining 100% financing (considered divestment properties).

Disadvantages  

As disadvantages, the property may have associated debts, which should be checked through the certificate of contents. You can obtain this document on the portal of Registo Predial Online, for 15 euros, or at a Land Registry Office, for 20 euros.  

Then, you should be aware that properties seized in favor of the State may not have fully legalized documentation (such as energy certificates, licenses, incorrect annotations), so the bank may not be able to finance a mortgage in these cases. This is because banks are required to ensure the proper legitimacy of transmission.

You should also make sure that the pledged property is without tenants. This is because, if the property has been rented for more than two years, the tenant may claim the right of first refusal to buy the house at the selling price. And if there is a spouse or heirs of the owner, they have the right of redemption, also being able to buy the property at the cost it was sold for. Note that the right of redemption prevails over the right of first refusal.

Therefore, you must verify all of these issues with the entity selling the property to ensure that there are no individuals who can claim these rights.

And if the owner of the property being foreclosed refuses to leave, they may also have to seek judicial assistance for this purpose.

Finally, make sure to visit the property several times beforehand, as buying a foreclosed house might mean buying a house in poor condition. You may have some expenses for rehabilitation works.

If you need help with buying a foreclosed house through a housing credit, you can turn to the services of the credit intermediaries Poupança no Minuto. With a helpful and free service, they assist you with all bureaucracy and mediation, simplifying your financing process.