We have many channels for finding properties to suit each of our client’s requirements. Tapping into our network to access off-market opportunities provides attractive expansion of the opportunities we can present to each buyer, in line with the brief we have developed together.
One channel which is little-known to international buyers is the “Asta”, the Italian court system for repossession and sale of property in the case of mortgage default. While most properties reaching the Asta are decidedly unlovely, there are the occasional gems which appeal to international buyers. And the prices are incredibly attractive. Read on to understand why this creates opportunity for our clients…
The process for a lender to repossess a property in Italy is lengthy and buyers can be in default on their mortgage payments for years before the Asta process kicks in. It is a last resort process when all other efforts to recover the mortgage dues have run out. When we find that an attractive property is being prepared for the formal court auction process we can step in with a buyer and save the lengthy auction process from being required, with the parties instructing the court to halt the Asta process. With a solid buyer in place, all parties will usually agree to arrange the sale of the property before it is locked into the full Asta auction process. The key is usually that the bank will recover its debt, and typically the property owner will receive some payment, although their bargaining position is weak. Their outcome will be better than under the Asta.
A client stepped in and bought this tired property before the Asta auction process
The auction process
Beyond this point there is a strict process for the Asta. Properties are listed as available on a set future date, at which they go up for auction through the court. This only happens after a lengthy process of valuing the property which, in our experience, provides a valuation well below normal market prices seen on the lake.
At the first auction when a property appears, the guide price is set at 80% of its assessed market value. If there are no bids at or above this level, it is relisted after an interval at around 60% of its market value. For those brave enough to hang on there can be a third auction round with the property listed at around 50% of its court-assessed valuation.
For those wanting to bid for a property through the Asta, the full funds must be ready and waiting in a bank account as immediate payment is required and bank mortgages are not accepted as part of the payment. There are a number of other small hoops to jump through, and once a property is listed for court auction it can progress rapidly so a buyer needs to be prepared to move quickly. If you purchase a property on the Asta you do not have any taxes to pay on the purchase, which adds further to the financial attractions of buying.
Stepping in earlier
It is interesting to see that attractive properties often disappear from the court listing a day or two before the auction date, or even at the last minute when you have arrived for the auction! This is part of the game of brinksmanship being played by owners and buyers, with the buyers trying to obtain a property without competition at the lowest possible price and the sellers holding out for something for themselves. It is akin to lawyers agreeing an out of court settlement on their way into the courthouse.
Apart from being in close contact with the court officials handling properties which have come under the direction of the courts, we have very useful contacts with the banks that are trapped in the lengthy process of recovering mortgages in default. This offers fertile territory for finding properties at an attractive price before they are locked into the auction process.
Asta impacts bank lending practices
The Asta process is lengthy, from a property first falling into mortgage arrears through to funds being recovered through the sale on the Asta. It explains why banks operate strict lending requirements, and often will not lend more than 60% of their property valuation. It is notoriously difficult for banks to recover their funds in case of default and the Asta process leads to recovery substantially below reasonable market value. The irony is that the loan to value restriction is tougher for international buyers yet it is almost exclusively Italian-owned properties that end up on the Asta.
A little checklist for the Asta
• buyer beware – all sales are final
• do your due diligence in advance to be certain what you are buying
• you need a trusted local representative – ask Ultissimo to act for you
• have funds sat ready in your Italian bank account so a banker’s draft can be issued immediately for 10% of the ‘asking price’ on the Asta – this enables you to bid on the day.
There are comparatively few properties on Lake Como that end up under control of the Asta, but rather more that have mortgage arrears with a bank and owner looking for a way out of their deadlock without ending up under the Asta. This might be the route to finding your ideal property and Ultissimo can open the door for you.