Judicial auctions, known as remates judiciales, allow investors to acquire real estate at prices significantly lower than market value through the Peruvian Judiciary’s electronic platform, Remaju. According to Cinthya Barreto, an associate at CMS Grau, these auctions follow a structured pricing model where base values drop by 15% in successive rounds if a property fails to sell, often allowing investors to secure assets for roughly 50% of their commercial appraisal.
How does the judicial auction pricing mechanism work?
The pricing structure is defined by strict regulatory steps designed to ensure the liquidation of assets. As stated by Cinthya Barreto, the first call for a bid starts at two-thirds (66%) of the property’s commercial value. If no buyer emerges, the second call reduces the base price by 15%. A third call triggers another 15% reduction. For an asset appraised at S/ 500,000, this sliding scale drops the entry price from S/ 333,333 in the first round to approximately S/ 240,833 by the third.
What are the requirements to participate in a digital auction?
Prospective buyers must navigate a formal registration process to access the Remaju platform. Cinthya Barreto notes that users must appear in person at commercial courts to create their official account. Furthermore, participants must provide an oblaje, a security deposit equivalent to 10% of the property’s appraised value. This deposit serves as a guarantee of serious intent; if the bidder does not win the auction, the full amount is returned.
What happens if the property is occupied?
Legal possession follows the adjudication of the sale. If a property is occupied, the presiding judge issues an order for the occupants to vacate within ten business days. According to Barreto, if the occupants refuse to leave, the court will authorize a forced eviction—known as a lanzamiento—carried out with the assistance of the national police.
How can investors maximize returns on auctioned property?
Successful investment in judicial auctions requires more than just a low purchase price; it demands a clear strategy for renovation and resale. William Gómez, CEO of Incapital, estimates that post-purchase renovations typically require an investment of around US$ 5,000. To expedite the sale, Gómez suggests partnering with real estate agents who generally charge a 3% commission on the final sale price.
Frequently Asked Questions
- Is the auction process transparent? Yes, the process is fully digital via the Remaju platform. Bids are placed “blind,” meaning participants cannot see the offers submitted by competitors until the bidding window closes.
- Can I lose my 10% deposit? No. The oblaje is purely a guarantee of intent. If you lose the auction, the Judiciary returns the full deposit to your account.
- Are there hidden costs? Beyond the purchase price and renovation costs (estimated at US$ 5,000 by William Gómez), investors should account for agent commissions, which typically average 3% of the sale price.
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