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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Hi Derek, yes, a nothing down deal is possible if the appraised value of a property is high enough. For example, a foreclosed property was sold for 1M at 10% downpayment at an auction, with a loan balance of 900K. If it was later appraised by one bank at 1.25M and they approve a loan of 80% of the appraised value, the approved loan amount would be 1M. You can then use the 1M to pay off the bank balance of 900K and the remaining 100K offsets the 100K downpayment, which results in a nothing down deal. This can really happen as I once had a loan approved that had an approved loan amount that was even HIGHER than the purchase price, meaning I could have pocketed some extra cash. Unfortunately, that deal didn’t push through due to some issues but it proved to me that nothing down deals are really possible!
mr. jay, did i get it right? a nothiing down deal is possible here? could it mean that the downpayment may have taken by the seller through another loan to the buyer?
thanks!
derek
Hi Pheng, Thanks! Haha, taga N@W ka rin pala. Sige ipon na pero tingin tingin ka na rin, baka maka hanap ka ng “nothing down” deal.
Hi Jay,
Wow, sayo pala tong blog na to. Small world, ka-egroup ko pala si misis mo. Will definitely drop by here more often. Lalo na pag na-ipon ko na pang-invest ko.
Keep it up! And congrats! 😉
Pheng
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Many thanks 🙂
Thanks Jay!
@Dragoro, thanks! Yes, will let you all know if there are any upcoming auctions.
Hi teamchi, you’re probably referring to the residential condo units, property #4 and #5 on the list, which are still available. =)
The one that got sold was one of the commercial condo units, property #75 on the list, for 2.8M.
Hmmm…The ones listed in the link were 130sqm and 243sqm, I did not see the 85sqm. How much? 🙂
Your welcome teamchi, the smaller unit got sold, the one with only 85sqm floor area.
Thanks, Jay. I was also eyeing the Kikusui condo. Too bad it got sold. There were 130sqm and 243sqm, I’m guessing the smaller one was the one that got sold?
Thank you. I’d just update myself via your blog of any upcoming auctions so I can sit in and see how things go.
Happy for you about your son’s recovery. I can relate to that. =)
Hi Dragoro, for Unionbank and RCBC, I have observed they keep on listing properties that were not sold in previous auctions in upcoming auctions. For auctions conducted by CBRE however, they don’t include unsold properties anymore in upcoming auctions. As for inspecting the property before the auction, I just have to set an appointment with the bank officer in charge of the particular property I am interested in and they can accompany me. For this auction I was supposed to visit a condo in Makati the week before the auction but my son had a bout with typhoid fever so I had to defer my inspection. When my son had already fully recovered(thank God!), I wanted to do my inspection but it was already the day before the auction and I was told that the building admin required 1 day advanced notice.
Hello Teamchi, the other properties sold were property #10(EGI Taft tower condo), property #28(Bulacan house and lot in Micah St.), and property #75(Kikusui Star Condo)
Hi Jay, would just want to ask if banks auction the same remaining properties they did in their previous auctions? I just thought how could you have inspected beforehand what they were about to auction off?
Be well 🙂
Thanks for posting this. What were the other 3 properties sold?