In the real estate market, auction properties are a special type of transaction that differs from general property purchases. In recent years, with the growing interest in real estate investment, auction properties have also been attracting increasing attention.
Auction properties are real estate properties that are forcibly sold by the court at the request of creditors when debtors default on mortgage payments or other debts. This system is designed to protect the rights of creditors and recover debts, and is strictly enforced in accordance with the Civil Execution Act.
In general real estate transactions, the seller and buyer negotiate directly or through a broker, but in the case of auction properties, the court takes the lead in the proceedings. This difference gives rise to the unique advantages and risks associated with auction properties.
In this article, based on our years of experience in the real estate industry, we will provide a detailed explanation of the advantages and risks of purchasing auction properties for those considering such an investment.To succeed in investing in auction properties, it is essential to understand the system and manage risks appropriately.
When considering the purchase of an auction property, it is important to not only be attracted by the low price, but also to fully understand the complex circumstances and risks behind it. We hope this article will be helpful in your real estate investment decisions.
The auction system is a form of compulsory execution stipulated in Article 43 and subsequent articles of the Civil Execution Act. The primary purpose of this system is to enable creditors to recover debts by forcibly selling the debtor's real estate through the court when the debtor fails to fulfill their monetary obligations.
The auction process begins when the creditor files a petition for the commencement of the auction with the district court.Upon accepting the petition, the court seizes the property and issues an order to commence the auction. This order prevents the property owner from freely disposing of the property.
The purchase of auctioned property differs fundamentally from general real estate transactions. The most significant difference is that the seller is not an individual or corporation but the court. This gives rise to the following special conditions.
First, the sale price of the property is not determined based on market value but on the appraisal value set by a court-appointed real estate appraiser. This appraisal value is referred to as the “base price” and is generally set lower than market value.
Second, the purchase process is conducted through a bidding process. Potential buyers submit bid documents within the specified period, and the highest bidder is awarded the property. No price negotiations, which are common in general real estate transactions, take place during this process.
Additionally, there are special circumstances regarding the transfer of the property. In general real estate transactions, the seller is obligated to transfer the property, but in the case of auctioned properties, the court has no such obligation, so the successful bidder must negotiate with the current occupant and handle the handover procedures on their own.
Auctioned properties are classified into several categories based on their cause of origin. The most common type is residential properties owned by individuals who are unable to repay their mortgages. These properties are auctioned off when financial institutions enforce their mortgage rights.
The next most common type is the auction of commercial real estate. These properties are put up for auction due to the financial difficulties or bankruptcy of a company, and may include land or buildings used for business purposes. These properties are often large in scale and may attract attention as investment properties.
Additionally, there are auction properties arising from inheritance issues. In cases where there are disputes among heirs or difficulties in paying inheritance taxes, inherited real estate may be put up for auction.These properties require particularly thorough investigation of property rights due to the complexity of inheritance relationships.
The auction procedure typically takes six months to one year from the filing of the petition to the payment of the sale proceeds. The procedure flow is as follows.
Once the petition to commence the auction is accepted, the court registers the seizure of the property in question.Following this, an on-site inspection by an enforcement officer and an appraisal by a real estate appraiser are conducted. Based on these results, detailed information about the property and the standard appraisal value are determined.
Next, a bidding period is set. The bidding period typically lasts about one week, during which potential buyers submit their bids. After the bidding period ends, the bids are opened, and the highest bidder is determined as the successful bidder.
Once the successful bidder is determined, the court issues a sale approval decision. If no objections are raised against this decision, it becomes final, and the successful bidder must pay the purchase price. Upon payment of the purchase price, the transfer of ownership registration is completed, and the successful bidder officially becomes the owner of the property.
The greatest appeal of auction properties is the potential to purchase them at a lower price than market value.Generally, auction properties are often sold at 60% to 80% of the market price, and in some cases, they can be purchased at an even lower price.
There are several reasons for this price difference. First, since auction properties are sold through forced sale, the seller has no room for price negotiation. Additionally, due to the risks mentioned below, the number of potential buyers tends to be limited compared to the general real estate market.
Furthermore, the appraised value of auction properties tends to be conservatively estimated.Real estate appraisers generally assess properties at a lower value than the market price, taking into account any defects or complexities in the property's rights. Since bidding is based on this appraised value, transactions are more likely to be concluded at prices below the market price.
However, for properties with good location conditions or high scarcity, competition may intensify, causing prices to rise to levels close to the market price.Therefore, to take advantage of price benefits, property selection and bidding strategies are crucial.
Auction properties may include properties in prime locations that are difficult to obtain through the regular real estate market. This is because auction properties are sold regardless of the owner's intentions, meaning that high-quality properties that would otherwise remain unsold may enter the market.
Especially in urban areas, properties near stations, or prime locations in commercial districts, supply is limited in the regular real estate market, and prices tend to be high. However, when sold as auction properties, they may offer the aforementioned price advantages regardless of their location.
Additionally, land that has been passed down through generations may be put up for auction due to inheritance issues or difficulties in business succession.Such properties often have excellent location conditions due to their historical background and are attracting attention as properties with high investment value.
However, properties with good locations tend to be highly competitive, so sufficient financial preparation and a detailed bidding strategy are necessary. It is also important to conduct a detailed investigation of the property and carefully consider factors other than location conditions.
Auction properties may offer high profitability from a real estate investment perspective.Since the purchase price often falls below market value, there is potential for improved rental yields when operating as a rental property.
For example, if a property with a market value of 30 million yen is purchased at auction for 20 million yen, the investment yield would significantly improve even with the same rental income. For a property with a monthly rent of 150,000 yen (1.8 million yen annually), the surface yield at market value would be 6%, but at auction, it would be 9%.
Additionally, some auction properties can have their rental rates increased through appropriate renovations or management. In cases where the property's condition has deteriorated due to the previous owner's neglect, investing in improvements may allow for rental rates above the market average.
Furthermore, auction properties may offer the potential for profit upon future resale. By purchasing a property at a low price, managing and improving it appropriately, and selling it when the real estate market recovers, capital gains may be realized.
However, when considering auction properties as investment properties, it is essential to carefully evaluate factors that may impact profitability, such as the presence of occupants, the condition of the property, and changes in the surrounding environment.
Purchasing auction properties requires specialized knowledge and procedures, which may result in limited competition compared to the general real estate market. This increases the opportunity to acquire properties at relatively lower prices.
Auction procedures are complex and often perceived as a high barrier for general real estate buyers. Factors such as limited property details, inability to inspect the property, and various risks tend to restrict the number of participants.
Additionally, information on auction properties is published on court websites or notices, but it is not as widely recognized as information on general real estate websites. Therefore, property information may not reach investors or specialized professionals who actively gather information.
This tendency is even more pronounced for properties in rural areas or those with special uses. In such cases, buyers who have conducted appropriate research and preparation may be able to acquire properties under relatively favorable conditions.
However, for properties with good locations or high investment value, competition may intensify due to the participation of specialized professionals and investors. Therefore, it is important to thoroughly understand the characteristics of the property and establish an appropriate bidding strategy.
Auction procedures are strictly enforced in accordance with the Civil Execution Act, ensuring transparency and fairness in the procedures. This significantly reduces the risk of opaque transactions or fraudulent activities that occasionally occur in general real estate transactions.
Since the court is the main entity conducting the procedures, the process of determining the sale price and the bidding procedures are conducted fairly.Bidding results are publicly disclosed, and the selection of the successful bidder is made through a transparent process. This allows purchasers to acquire properties in a fair competitive environment.
Additionally, the court conducts a detailed investigation into the property's legal rights. This includes verifying the property title deed and clarifying any existing liens, mortgages, or leasehold rights. This helps mitigate the risk of unforeseen legal issues arising after the purchase.
Furthermore, in the auction process, legally clear procedures are established for the payment of the purchase price and the transfer of ownership. The successful bidder must pay the purchase price within the specified timeframe, and the court will handle the transfer of ownership, ensuring that the buyer securely obtains ownership.
However, while the procedures are highly transparent, flexible negotiations on terms, which are possible in general real estate transactions, are not available. Additionally, the deadlines for procedures are strictly enforced, so schedule management is crucial.
Advantages Detailed Content Notes
Price advantages Purchase at 60–80% of market price Potential for intense competition for well-located properties
Location advantages Opportunity to acquire well-located properties Detailed investigation and bidding strategy required
Investment advantages Potential for high investment returns Important to confirm occupants and property condition
Competition advantages Limited competition Competition varies depending on property characteristics
Procedural advantages Transparency and fairness Flexible negotiation of terms not possible
One of the biggest risks of purchasing auction properties is that you cannot inspect the property before purchase. In general real estate transactions, you can inspect the property before purchase to confirm the condition of the building, the functionality of the facilities, and the surrounding environment in detail. However, with auction properties, such opportunities for prior inspection are significantly limited.
Information about auction properties is provided through a set of three documents prepared by the court: the property description, the current condition survey report, and the appraisal report. While these documents contain basic information about the property, they provide only limited details about the actual condition of the building or any damage to its structure.
In particular, regarding the interior of the building, the documents only include the results of an exterior inspection and interviews conducted by the court officer. If cooperation from current residents or users cannot be obtained, it is difficult to ascertain the detailed condition of the interior.This poses the risk of unexpected repair costs after purchase.
Additionally, the operational status of facilities cannot be confirmed in advance. From basic infrastructure such as water supply and drainage systems, electrical systems, and gas systems to equipment like air conditioners and water heaters, it is impossible to determine their actual operational status before purchase. If these facilities have defects, high repair costs may arise after purchase.
Furthermore, it is difficult to identify structural issues with the building in advance. Structural defects such as foundation settlement, damage to columns or beams, or roof leaks cannot be detected without specialized inspections, but such inspections are not conducted for auction properties.
When purchasing a foreclosed property, the seller (the court) is not liable for defects (contract non-conformity liability). Therefore, even if defects are discovered after purchase, the seller cannot be held responsible. This is a significant difference from general real estate transactions and poses a major risk for buyers.
In general real estate transactions, the seller is responsible for repair costs or compensation for damages within a certain period if hidden defects are found in the property. However, in the case of auction properties, the court forcibly sells the property, and there is no guarantee of its quality.
This exemption from liability applies to all defects, from structural defects in the building to malfunctions in the facilities. For example, if a roof leak is discovered after purchase or if there are serious defects in the plumbing or drainage systems, the repair costs will be entirely the responsibility of the purchaser.
The same issues apply to the land. If issues such as weak soil, soil contamination, or the presence of buried objects are discovered after purchase, the costs for addressing these issues must be borne by the purchaser.Particularly in cases of former factory sites or older buildings, there is a risk of unexpected soil contamination being discovered.
Furthermore, liability for legal defects is also exempted. If legal issues such as violations of the Building Standards Act or Urban Planning Act are discovered after purchase, the costs for rectification and any legal liability will be borne by the purchaser. These issues could significantly impact the use of the property or its future resale.
In auction properties, there may be occupants on the property, and the responsibility for their eviction falls on the purchaser. This is one of the major risks specific to auction properties and may result in the property being unavailable for use for an extended period.
There are various cases of occupants. The most common is when the former owner or their family continues to reside on the property. Even during the auction process, the former owner retains the right to reside until ownership is transferred, so they may continue to live there after the auction.
Another case is when there are tenants. If a lease agreement was in place before the auction, the agreement generally continues after the auction. However, the rights of the new owner may become complicated depending on the terms of the lease agreement and whether the necessary legal requirements are met.
Even more serious is the case where there are squatters. This may involve relatives or acquaintances of the former owner, or even unrelated third parties who are occupying the property without any legitimate claim.In such cases, legal proceedings are necessary to demand eviction, which can take a significant amount of time and money.
Negotiations for eviction must be conducted by the purchaser. If a resolution cannot be reached through voluntary negotiations, an eviction lawsuit must be filed, followed by enforcement proceedings. These procedures may take several months to several years, during which time the property cannot be effectively utilized.
Additionally, costs related to eviction are the responsibility of the purchaser.Expenses such as moving costs, litigation fees, and enforcement costs may exceed expectations.
Auction properties carry the risk of requiring unexpected repair costs after purchase. This is due to the inability to inspect the property in advance and the unclear management status of the property.
Many properties put up for auction may not have been properly maintained due to the financial difficulties of the previous owner.Neglected regular maintenance or postponed necessary repairs may have led to the deterioration of the building.
Especially in older properties, infrastructure such as plumbing, electrical, and gas systems may be significantly deteriorated. Replacing or repairing these systems may cost hundreds of thousands to millions of dollars.
Additionally, the exterior of the building requires attention.Exterior painting, roof repairs, and waterproofing are essential for maintaining a building but can be costly. In particular, if there is a roof leak, immediate action may be required after purchase due to the urgency of the situation.
Furthermore, various repairs may be necessary inside the building. Replacing flooring, changing wallpaper, and updating plumbing fixtures in kitchens and bathrooms may require significant expenses to bring the property into a condition suitable for living or renting.
If there are structural issues, the situation becomes even more serious. Reinforcing the foundation, repairing columns or beams, or conducting earthquake-resistant reinforcement work may be necessary, which could result in repair costs exceeding the property's purchase price.
Purchasing a foreclosed property requires complex procedures and specialized knowledge that differ from general real estate transactions. If these procedures are not properly understood and executed, there is a risk of missing out on purchase opportunities or facing unforeseen issues.
First, specialized knowledge is required to collect and analyze property information. The ability to accurately understand the three documents provided by the court (property details, current condition survey report, and appraisal report) and appropriately assess the risks and value of the property is essential. These documents contain numerous legal terms and real estate jargon, which may be difficult for the general public to understand.
The bidding process also has strict rules. If any step is missed, such as preparing the bid document, paying the deposit, or adhering to the bidding period, the bid may be invalidated. Additionally, determining the bid price requires evaluating the property's fair value and analyzing the actions of competing bidders.
Post-auction procedures are also complex. Payment deadlines are strictly enforced, and failure to pay by the deadline may result in the cancellation of the sales contract and forfeiture of the deposit. Additionally, proper knowledge and preparation are required for property transfer registration and various tax procedures.
Furthermore, if the property is occupied, eviction procedures require knowledge of civil litigation law and civil execution law. Appropriate legal responses are required at each stage, from voluntary negotiations to litigation and forced execution.
When obtaining financing from financial institutions, there are also restrictions that differ from those for general real estate purchases. Due to the difficulty of evaluating the collateral value of auction properties, financing conditions may be stricter, or financing may not be available at all.
Risk Factors Specific Details Necessity of Countermeasures
No property inspection Not possible to confirm the condition of the building interior or facilities External inspection and evaluation by an expert
No warranty for defects No liability for defects discovered after purchase Ensure sufficient contingency funds
Occupants present Negotiation for surrender and legal procedures required Confirm occupancy status in advance and prepare legally
High repair costs Possibility of unexpected repair costs Detailed inspection of building condition and cost estimation
Complex procedures Specialized knowledge and strict deadline management required Consult with experts and ensure sufficient preparation time
The purchase of auction properties requires procedures that differ significantly from those of general real estate transactions. Below is a detailed explanation of the flow of purchasing auction properties by stage.
Stage Procedure content Estimated period Necessary preparations and points to note
1. Property investigation Collection and analysis of auction property information 1-2 weeks Confirm court website, obtain three documents
2. On-site inspection Confirm the property's exterior and surrounding environment Several days Confirm occupancy status, building exterior, and surrounding environment
3. Financial preparation Prepare bidding funds and deposit 1-2 weeks Consult with a bank regarding financing, confirm available funds
4. Bidding preparation Prepare bidding documents and pay deposit 3-5 days Determine bidding price, prepare necessary documents
5. Bidding execution Submission of bid documents During the bidding period Strict adherence to deadlines, ensure all documents are complete
6. Bid opening and result confirmation Confirmation of winning bid Bid opening date If the bid is successful, begin preparations for the next stage
7. Sale approval decision Court approval of the sale Approximately 1 week Wait for the objection period to expire
8. Payment of purchase price Payment of remaining purchase price Within one month after decision is finalized Strictly adhere to deadlines; late payment may result in contract termination
9. Transfer of ownership Completion of registration procedures Within a few days after payment of purchase price Registration by court ex officio
10. Delivery Delivery of property and handling of occupants May take several months depending on circumstances; separate negotiations required if occupants are present
Property investigation stage: Collect information on auction properties through the court's website and public notices. Obtain the three documents—property details, current condition report, and appraisal report—and conduct a detailed analysis of the property's basic information, rights relationships, and appraised value. At this stage, it is important to carefully consider the legal issues and investment value of the property.
On-site investigation stage: Visit the property's location and inspect the building's exterior and surrounding environment.By directly confirming the presence of occupants, the condition of the building, and the convenience and environment of the surrounding area, we collect information that cannot be obtained from written documents.
Funding Preparation Stage In this stage, we prepare the funds necessary for bidding. Since the purchase of auction properties generally requires payment in cash, it is necessary to obtain prior approval for a bank loan if financing is required. Additionally, preparation of the required deposit (typically 20% of the appraised value) is necessary for the bidding process.
Bidding Preparation Stage: We determine the bid price and prepare the necessary documents. The bid price must be carefully determined based on the property's valuation and competitive conditions. The bid document must be prepared with accuracy, as any errors may render the bid invalid.
Bidding Execution Stage: We submit the bid document within the specified period. The bidding period is typically about one week, during which the bid price can be changed multiple times.However, bids submitted after the deadline will not be accepted, so strict deadline management is essential.
Opening of bids and confirmation of results: After the bidding period ends, the bids are opened, and the bidder who submitted the highest bid is determined as the successful bidder. If no successful bidder is determined, the deposit is refunded.
Sale approval decision: The court issues a sale approval decision. If any interested parties file an objection to this decision, a hearing is conducted.If no objections are filed or if objections are rejected, the decision becomes final.
Payment of the Purchase Price: Within one month of the finalization of the sale approval decision, the remaining purchase price must be paid. This deadline is strictly enforced, and any delay will result in the cancellation of the sales contract and the forfeiture of the deposit. At the same time as the payment of the purchase price, various taxes (such as registration tax and real estate acquisition tax) must also be paid.
Ownership Transfer Stage: After confirmation of payment, the court will register the transfer of ownership by official authority. This registration formally establishes the buyer as the owner of the property.
Delivery Stage: The buyer receives actual possession of the property. If there are no occupants, the delivery can proceed smoothly. However, if there are occupants, separate negotiations or legal procedures for vacating the premises may be required.
Document Name Purpose Acquisition Method Notes
Residence certificate Proof of identity for the bidder Municipal office Issued within the last 3 months
Certificate of seal registration Proof of seal impression on the bid document Municipal office Issued within the last 3 months
Certificate of qualification Proof of identity for corporations Legal Affairs Bureau Issued within the last 3 months
Certificate of deposit of the guarantee deposit Proof of payment of the guarantee deposit Financial institution Required at the time of bidding
Bid document Expression of intent to bid Obtained from the court No errors allowed
When purchasing auctioned properties, various costs in addition to the property price may arise. It is important to understand these costs in advance and incorporate them into your financial plan.
Cost Item Estimated Amount Payment Timing Notes
Property Price Auction Price At the time of payment of the purchase price Payment in full is the general rule
Deposit 20% of the appraised value At the time of bidding At the time of winning the bid, it is applied to the purchase price
Registration Tax 2% of the assessed fixed asset tax value At the time of payment of the purchase price Costs for transferring ownership
Real Estate Acquisition Tax 3% of the assessed fixed asset tax value Within a few months after acquisition Prefectural tax
Legal Fees 100,000–300,000 yen At the time of registration If there are mortgage liens, etc.
Survey Costs 50,000–200,000 yen Before purchase Professional property survey
Delivery Costs Varies depending on circumstances At the time of delivery May be higher if there are occupants
Investing in auction properties can offer significant benefits with the right knowledge and preparation, but entering the market without sufficient consideration can expose you to serious risks. It is important to carefully evaluate the five benefits and five risks explained in this article and make a prudent investment decision.
While there are definite price advantages, they also suggest that the property may have some issues.Understanding the reasons why the property is priced below market value and appropriately assessing the risks is the key to success.
Properties with good locations or high investment value tend to be highly competitive. Therefore, in order to take advantage of price benefits, it is necessary to have the ability to discover properties that other investors are unlikely to notice and to have an appropriate investment strategy.
The following characteristics are desirable for investors suitable for auction property investment.
First, it is important to have sufficient financial strength and funding capacity. Auction properties require cash payment in full, and unexpected repair costs or moving expenses may arise, so it is advisable to have financial flexibility equivalent to 1.5 to 2 times the property price.
Second, it is important to have real estate expertise. Various specialized knowledge is required, such as property valuation, understanding legal rights, and assessing the condition of buildings. It is necessary to acquire this knowledge yourself or build a network of reliable experts.
Additionally, it is important to have a high risk tolerance and a long-term perspective. Investing in auction properties may face various issues in the short term, but by addressing them appropriately, significant returns can be expected in the long term.
Furthermore, it is important to be able to invest the time and effort required to handle the complex procedures. Purchasing and utilizing auction properties requires more time and effort than general real estate investment.
To succeed in auction property investment, please refer to the following action guidelines.
Thorough preparation is the most important step. Take sufficient time to gather information on auction properties, investigate the properties, and prepare funds. In particular, we strongly recommend seeking the assistance of experts such as architects and real estate appraisers when conducting detailed property investigations.
Thorough risk management is also important. Identify potential risks in advance and prepare countermeasures for each one. In particular, it is important to develop a financial plan that anticipates the worst-case scenario for repair costs and eviction costs.
Actively collaborate with experts. By collaborating with experts in various fields, such as lawyers, judicial scriveners, architects, real estate appraisers, and tax accountants, you can minimize risks and maximize investment returns.
Continuous learning is also essential. The auction system and real estate market are constantly changing, so it is important to continuously acquire the latest information and knowledge.
If you are considering investing in auction properties, we recommend the following steps.
1. Acquire basic knowledge: Systematically learn the basics of auction systems and real estate investment.
2. Build a network of experts: Establish relationships with trusted experts and set up a consultation system.
3. Develop a financial plan: Confirm the amount of funds available for investment and consult with financial institutions regarding loans.
4. Conduct market research: Conduct a detailed investigation of real estate market trends in the target investment area.
5. Gain practical experience: Start with smaller properties and gradually build up your experience.
Investing in auction properties can be a highly attractive investment opportunity with the right knowledge and preparation. However, it is dangerous to underestimate the risks involved. We encourage you to conduct careful consideration and thorough preparation to ensure you are on the path to success.
INA&Associates provides consultations on real estate investment, including auction properties.Based on our extensive experience and specialized knowledge, we will support you in achieving your investment goals. Please feel free to contact us if you are considering investing in auction properties.
A1. It is possible to use a mortgage to purchase an auction property, but there are restrictions compared to general real estate purchases.
First, auction properties require payment in full, so the period between loan approval and execution is short.While there is typically a one-month grace period for regular real estate purchases, for auction properties, the loan must be disbursed by the payment deadline (within one month of the sale approval decision).
Additionally, some financial institutions may not offer loans for auction properties. This is due to factors such as the difficulty in assessing the collateral value of the property and risks associated with the presence of occupants. If you plan to use a loan, it is important to consult with multiple financial institutions in advance to confirm the possibility of obtaining a loan.
Loan conditions also tend to be stricter than those for general residential mortgages. For example, the down payment ratio may be set higher, or the interest rate may be set higher. Therefore, it is important to prepare sufficient funds in advance.
A2. If you purchase a foreclosed property with an occupant, the responsibility for eviction lies with the purchaser, but a phased approach is effective.
First, we recommend starting with voluntary negotiations. Through direct negotiations with the occupant, you can request voluntary eviction under conditions such as partial coverage of moving expenses or setting a moving deadline. In many cases, the issue can be resolved at this stage.
If voluntary negotiations fail, you should file an eviction lawsuit. In this lawsuit, you must prove that the occupant has no valid right to occupy the property and request eviction. The litigation period typically lasts between three and six months.
If the occupant refuses to vacate even after obtaining a favorable judgment in court, you may apply for enforcement of judgment. The court-appointed enforcement officer will carry out the forced eviction, but this stage requires significant costs and time.
Note that if the occupant is a tenant, the response will vary depending on the terms of the lease agreement and the presence of any priority rights. If the tenant is a lawful tenant, the lease agreement must be transferred.
A3. Repair costs for foreclosed properties vary significantly depending on the condition of the property, but we recommend budgeting approximately 20% to 50% of the property price.
Repair costs may vary depending on the age of the building and its type.For relatively new properties built within the last 10 years, repairs may be limited to cleaning and minor repairs, with costs typically ranging from 10% to 20% of the property price.
On the other hand, properties built over 20 years ago may require major repairs such as plumbing, electrical systems, or exterior renovations. Properties over 30 years old may require structural repairs or complete system upgrades, resulting in repair costs exceeding 50% of the property price.
To accurately estimate repair costs, it is important to conduct a detailed survey by an architect or construction company. In addition to an exterior inspection, it is important to check the condition of the interior of the building to the extent possible and identify necessary repair items.
Furthermore, repair costs can be categorized into urgent repairs and those that will be necessary in the future. Urgent repairs, such as roof leaks or plumbing issues, require immediate attention after purchase, so it is important to ensure sufficient funds are available.
A4. Information on auction properties is mainly published on court websites.
The most important source of information is the “Real Estate Auction Property Information Site” operated by each district court. This site provides basic information on auction properties, bidding periods, and opening bid schedules. You can also download a set of three documents: the property details sheet, the current condition survey report, and the appraisal report.
The “BIT (Real Estate Auction Property Information)” website (https://www.bit.courts.go.jp/) is also convenient for searching auction property information nationwide. This site allows you to search for properties based on conditions such as region, property type, and price range.
Private real estate information sites may also provide auction property information, but to obtain the most up-to-date and accurate information, we strongly recommend confirming the information on the official court website.
A5. To avoid failure in auction property investment, thorough prior research and risk management are most important.
First, do not neglect detailed property investigations. Analyze the contents of the three-document set in detail and accurately understand the property rights and condition of the property. In particular, it is important to conduct thorough investigations into property rights such as mortgages or leasehold rights, the presence of occupants, and the condition of the building.
Next, it is important to conduct an appropriate price evaluation. Accurately assess the market value of the property, consider repair costs and other expenses, and determine a reasonable bid price. It is important to make investment decisions based on objective data rather than emotional judgments.
Additionally, ensuring sufficient financial flexibility is crucial. Calculate the total investment amount in advance, including not only the property price but also repair costs, relocation expenses, and various taxes, and ensure you have sufficient financial flexibility to cover these costs.
Furthermore, actively collaborate with experts. By seeking advice from professionals such as lawyers, judicial scriveners, architects, and real estate appraisers, you can minimize risks and increase the likelihood of a successful investment.
Finally, it is important to maintain a long-term perspective. While auction property investment may face various challenges in the short term, addressing them appropriately can lead to significant returns in the long term. Patience and steady progress are key to success.
Civil Execution Act
This law serves as the legal basis for auction procedures. All procedures, from the filing of an auction application to the payment of the purchase price, are conducted in accordance with this law.
e-Gov Law Search - Civil Execution Act
Real Property Registration Act
This law contains provisions regarding the transfer of ownership through auction.
e-Gov Law Search - Real Property Registration
Courts - Real Estate Auction Property Information
Official website where you can search for auction properties nationwide. Detailed information on the latest properties and bidding procedures is provided.
BIT Real Estate Auction Property Information
Ministry of Justice
Provides detailed information on real estate registration and civil execution systems.
Ministry of Land, Infrastructure, Transport and Tourism
Provides information on real estate market trends and system reforms.
Ministry of Land, Infrastructure, Transport and Tourism Homepage
Public Interest Incorporated Association All Japan Real Estate Association
Provides consultation services and training information related to real estate transactions.
All Japan Real Estate Association
Public Interest Incorporated Association Real Estate Guarantee Association
Provides information on ensuring the safety of real estate transactions.
Real Estate Guarantee Association
Japan Federation of Judicial Scriveners
Provides specialized consultations on auction procedures and real estate registration.
Japan Federation of Judicial Scriveners
Japan Federation of Bar Associations
Provides consultations on legal disputes and litigation procedures.
Japan Federation of Bar Associations
Public Interest Incorporated Association Japan Institute of Real Estate Appraisers
Provides specialized consultations on real estate valuation.
Japan Federation of Real Estate Appraisers
Housing Finance Agency
Information and consultation services related to housing loans are provided.
Japan Bankers Association
General information related to bank loans is provided.
National Tax Agency
Tax information related to real estate, such as real estate acquisition tax and capital gains tax, is provided.
Local Tax Joint Organization
Information related to fixed asset tax and urban planning tax is provided.
【Source
This article is based on relevant laws and regulations such as the Civil Execution Act and the Real Estate Registration Act, publicly available court information, and practical experience in the real estate industry. Please confirm the latest amendments to laws and regulations and changes to systems on the official website.
【Disclaimer
The content of this article is for general informational purposes only and does not constitute individual investment advice or legal advice. If you are considering investing in auction properties, please consult a professional.