Buying an apartment at a state auction - how to save money and buy “clean” real estate

Government procurement for the acquisition of real estate. Where to start and how does it work?

At the beginning of their journey, beginners should understand what government procurement is? State procurements

– this is a special procedure for the acquisition of various goods, works and services through procurement in accordance with the procedure approved by law.

The customer cannot simply buy products from the manufacturer; he must organize a procurement procedure and, within the framework of competition, select the most suitable contractor.

We can say that the state purchases everything; this market is huge and constantly growing. Purchasing real estate is one of the areas where you can make money. This is primary or secondary housing, shared construction. The rules of the “game” are collected in Federal Law No. 44-FZ of April 5, 2013 “On the contract system in the field of procurement of goods, works, services to meet state and municipal needs” (hereinafter 44-FZ).

As elsewhere, this area has its own characteristics, but the standard set of rules is the same for everyone.

How does the state buy the necessary premises? Methods for identifying a supplier

The future participant needs to understand the regulatory documentation:

Part 1 Article 24 44-FZ:

To purchase real estate, auction organizers are required to use any of
the competitive methods of
determining a supplier or purchase housing from
a single supplier
 
(Article 93 44-FZ).
 

Also, the purchase is carried out for a single supplier if the state acquires a non-residential building, structure, structure, non-residential premises into state or municipal ownership (clause 31, part 1, article 93 of 44-FZ).

Clause 38 and Clause 39 Part 1 Article 93 44-FZ:

Standard economy class housing can be purchased from a single supplier (developer).
How do you know if a property belongs to economy class? This can be found in the Order of the Ministry of Construction of Russia dated November 14, 2016 No. 800/pr .
 

According to clause 38, part 1, article 93 44-FZ

the contract is signed with a participant who has previously concluded, in accordance with the Town Planning Code of the Russian Federation, an agreement on the development of the territory or an agreement on the comprehensive development of the territory for the purpose of constructing standard housing.
And according to clause 39, part 1, article 93 44-FZ,
the winner of the auction must have a concluded agreement for the free use of a land plot, a lease agreement for a land plot within the framework of Federal Law No. 161-FZ of July 24, 2008 “On promoting the development of housing construction "

Officials purchase housing for orphans and other residential real estate through electronic auctions

, because
real estate transactions with code 68 according to OKPD2 are part of the auction list, which was approved by Decree of the Government of the Russian Federation No. 471-r dated March 21, 2016.
From January 1, 2021, benefits were introduced for individuals - owners of residential premises. Now they can offer their property to the state to purchase housing for orphans and children left without parental care. For this procedure, a request for proposals in electronic form is used (clause 7, part 2, article 83.1 44-FZ).

We found out what methods are used to purchase residential and non-residential real estate: purchase from a single supplier, electronic auction, request for proposals in electronic form, etc.

If the purchase of non-residential real estate, as well as residential real estate (primary) is carried out only from developers, then secondary housing of economy class can be purchased from any participants. The average cost of one-room apartments is up to 3 million rubles with cosmetic renovations.

Niche analysis shows that only 1-2 suppliers are involved in the procurement and many failed procedures due to lack of applications. There is almost no competition here. But why is that?

The reasons for this phenomenon arise from practice:

1. The owners are not interested in government procurement and therefore do not participate in it. It is easier for them to turn to experienced organizations and pay specialists a commission for the service than to understand the topic themselves.
2. There are few specialists who understand both 44-FZ and real estate. But knowing the law is not enough. It is important to be sociable and talk convincingly with homeowners. If you are a private person, you will have a hard time. But you can always attract help from people who are good at it.
3. Companies and entrepreneurs specialize in one area and are afraid to develop real estate niches, because... This is an unknown topic for them.
4. Agencies and realtors in their work adhere to a proven path and do not delve into government procurement.
5. Those who are interested in this topic do not have enough funds to independently participate in the auction.

What is the income from government procurement of real estate?

Profit from successful transactions depends on many reasons: region, condition of the premises, documentation requirements and the number of participants. Earnings from one sale on average are 100-300 thousand rubles. The transaction itself can last up to 2 months from the date of publication of the notice until payment is received under the contract.

Calculation of NMCC

Before carrying out the procurement procedure, the organizers calculate the initial (maximum) contract price (ICP). At the same time, they are guided by the provisions of Part 6 of Article 22 of 44-FZ and use the method of comparable market prices (market analysis) for calculation.

The customer monitors real estate prices in publicly available sources and determines the average price of one square meter. The customer should not use the standard prices per square meter of housing established in the regions, but information from open sources.

When purchasing housing from a single supplier, the determination of NMCC occurs in accordance with the procedure specified in Part 21.1 of Article 22 of 44-FZ.

Description of the procurement object

The next step for the customer after determining the NMCC is the preparation of technical specifications (TOR), which describes the procurement object and specifies the requirements for participants. At this stage, auction organizers turn to Article 33 of 44-FZ.

The description of the procurement object shall indicate:

• Total area;
• Number of rooms;
• Number of floors of the house;
• Year of construction;
• Location;
• Finishing;
• Availability of metering devices.

Requirements for participants

You can find out about the requirements in Article 31 of 44-FZ. This list is standard for all participants.

Clause 1, Part 1, Article 31 of 44-FZ speaks of the participant’s compliance with the requirements established in accordance with the legislation of the Russian Federation for persons supplying goods, performing work, or providing services that are the object of procurement. As for our topic, we are almost always talking about providing an Extract from the Unified State Register of Real Estate (USRN), which the participant attaches as part of the application.

But sometimes customers, instead of an Extract from the Unified State Register, specify the possibility of providing:

• certificates of state registration of property rights;
• documents of title (if the right was registered before 1998: privatization agreement / purchase and sale agreement / gift agreement / exchange agreement / rent agreement / shared construction agreement / certificate of the right to inheritance by law / certificate of the right to inheritance by will / or other document provided for in Article 14 218-FZ “On State Registration of Real Estate”).

But is the requirement for an Extract from the Unified State Register of Real Estate legal if the participant in the auction can be not only the owner himself, but also his representative by proxy? (Part 3 of Article 27 44-FZ). We will not find a clear answer to this question. Here are some points of view:

1. The Letter of the Federal Antimonopoly Service of Russia dated 08/07/2019 No. AK/68293/19 states that both the owner and his representative (by proxy), accredited on the electronic trading platform in accordance with the law, can participate, as well as sign a contract on behalf of the owner.
2. In the decisions of the FAS in case No. 012/06/106-266/2019 dated June 13, 2019 and case No. 054/06/66-710/2019 dated April 22, 2019, the FAS says that they have the right to take part in auctions only premises owners.
3. Resolution No. F03-5066/2018 dated December 10, 2018 of the Arbitration Court of the Far Eastern District states that state registration of ownership of real estate is not mandatory in some cases. The subject of the purchase may be a product in civil circulation, in respect of which the current legislation only provides for the existence of ownership rights.

State registration of rights to real estate can be carried out simultaneously with state registration of the transfer of such rights or simultaneously with state registration of a transaction with a real estate property.

The moment is difficult, so take a serious look at the documentation requirements and, if necessary, send a request for clarification of the provisions of the procurement documentation using the functionality of the electronic platform.

Also, when studying the documentation, pay attention to:

• Payment terms (in the draft contract);
• “If there are funds in the budget” - this wording should alert you, because you can wait a very long time for the receipt of funds in the budget. There must be specific deadlines;
• The procedure for transferring ownership rights (5 days is not enough, it should be 10-15 days);
• Customer requirements (new building or secondary, renovated).

Stages of bidding and contract conclusion

Since 2021, all procedures under 44-FZ have become electronic and are carried out at eight ETPs:

1. CJSC Sberbank-AST (sberbank-ast.ru);
2. RTS-tender LLC (rts-tender.ru);
3. JSC "Unified Electronic Trading Platform" (roseltorg.ru);
4. National electronic platform (etp-ets.ru);
5. JSC "Agency for State Order of the Republic of Tatarstan" (zakazrf.ru);
6. JSC Russian Auction House (RAD) (lot-online.ru/home/index.html);
7. JSC "TEK - Torg" (tektorg.ru);
8. LLC "Electronic trading platform GPB" (etpgpb.ru).

To participate in the auction, you must have an enhanced qualified electronic signature and registration in the Unified Information System (UIS). 

It is also necessary to open a special account to deposit the application security. The topic of special accounts is very extensive, you can get acquainted with it here.

Government purchases of real estate are most often carried out in the format of an electronic auction. 

An application for participation in an electronic auction consists of 2 parts, which are sent to the ETP simultaneously:

1. technical characteristics of the auction object;
2. information about yourself with the provision of the necessary documentation. 

After which the customer reviews the 1st part for compliance with the requirements and makes a decision on the admission of the contractor to the auction. The auction takes place on the appointed day and time at the ETP. Participants submit price proposals, lowering the contract amount by a set increment.

After the auction, the customer checks the 2nd part of the applications and appoints the winner who offered the best price and meets all the requirements of the procedure. A contract is concluded. Then the property is transferred to the customer, the transfer and acceptance certificate is signed, the transaction is formalized and payment is made under the contract.

Acquisition of property at auction or by pre-emptive right

The State Unitary Enterprise "City Property Management Center" sells real estate objects that are the property of the city of Moscow.

The list of apartments put up for auction can be viewed in the Residential Real Estate section or on the Moscow Investment Portal.
Thanks to electronic trading, the procedure for purchasing apartments is completely transparent, eliminates the possibility of speculation, and does not contain any hidden surcharges. The sale of apartments is carried out on the basis of the order of the Department of City Property of the City of Moscow

The initial (minimum) price of the contract is formed on the basis of an independent market assessment.

If an apartment is purchased with a mortgage, then during the application campaign it is necessary to obtain the bank’s consent to receive a mortgage.

The letter of credit is opened on the day the purchase and sale agreement is concluded. Only after state registration of the transfer of ownership and disclosure of the letter of credit, the buyer receives the keys to the apartment.

Apartments are sold through electronic trading on electronic trading platforms in real time.

List of electronic trading platforms - Roseltorg, Sberbank-AST, RTS-Tender.

Electronic trading is an open auction for the supply of goods and services, taking place online on the Internet. A special feature of the procedure is the transparency and control of the Federal Antimonopoly Service. This procedure is used for procurement by government agencies.

To participate in the auction, you must issue an Electronic Digital Signature (EDS) and accredit it on the Electronic Trading Platform (ETP)

There you can also find all announced tender procedures.

State Unitary Enterprise "TSUGI" provides advice on issues of obtaining an electronic signature, accreditation at the site, and filing an application.

After accreditation of the digital signature, a personal account is issued to which you must make a security deposit and then submit an application on the website of the electronic trading platform, attaching all the necessary documents.

Submission of the application is carried out within the time limits established by the notice of the auction.

If you win, the security deposit is returned.

In case of loss, the security payment is returned within 5 working days from the date of signing the purchase and sale agreement with the winner.

In case of not being allowed to participate in the auction, the security payment is returned within 5 working days from the date of signing the protocol for consideration of applications.

The security payment will be returned to auction participants within 5 working days:

• from the date of signing the protocol of the auction, with the exception of participants whose applications were assigned the first, second and third serial numbers;
• from the date of signing the purchase and sale agreement to the participants who are assigned the second and third serial numbers.

Any individual can take part in the auction. or legal a person who has an EDS (electronic digital signature). Unfortunately, there are no benefits when buying an apartment.

You can participate in the auction any number of times during the year.

Where can I find information about tenders?

To search for information of interest, a special portal has been developed - the Unified Information System (UIS). His Internet address: zakupki.gov.ru

. Search is free and all data is publicly available. The system offers search by filters. These include:

Keywords:

apartments*, non-residential*, residential*, real estate*, housing, resettlement, etc.;
OKPD2 code :
68.10.12.000, 68.10.11.000;
Purchases according to :
44-FZ;
Method for determining the supplier :
electronic auction, open tender in electronic form, request for proposals in electronic form;
Customer location :
the desired region is indicated;
Delivery location :
the desired region is indicated;
Procurement stage :
submission of applications.

At the beginning of your journey, it would be wiser to gain experience by searching for purchases in your region. Later it will be possible to search for real estate throughout Russia.

Save your search filters so you don’t waste time filling out the same parameters later.

Where to look for real estate?

In order to offer real estate to the state, you need to have it in your piggy bank. But where to find it? The easiest way is to use special sites. They are known to everyone. Here are some of them:

www.domofond.ru www.cian.ru www.avito.ru www.irr.ru www.youla.ru

Finding suitable apartments and negotiating with owners or realtors will take a lot of time. It is important not only to find a good option, but also to be convincing in order to successfully conclude a deal in the future. Therefore, you need to constantly train and acquire communication skills, be positive and charismatic. If this is difficult for you, then give this block of work to those who can handle it better than you.

Scheme for purchasing housing at auction

A citizen who decides to visit and participate in public auctions must develop his own scheme for how to buy an apartment at an auction, setting price limits and not allowing the excitement to go beyond acceptable limits. The implementation procedure differs from the standard algorithm, requires unusual actions from the participant and depends on the trading platform itself and the organizers of the process.

Algorithm of actions

After reading the requirements of a specific site in print media or on Internet sites, in order to buy an apartment through an auction, you should:

1. Register in accordance with the requirements of the site and make a deposit. The registration process begins in most cases five days before the event. If the organizers allow “remote” participation, then you must obtain an electronic key valid for a year.
2. Be present at the auction for the sale of apartments in person or remotely using software, provided that the selected site does not require a mandatory personal visit.
3. Decide on the tactics and strategy for participating in the auction. It is recommended to set an upper price limit, beyond which you should not go. The process includes increasing the price for a lot (apartment) with a certain step established by the manager. For example, if the step is 20 thousand rubles, then the subsequent participant cannot offer an increase in the previous price by 15 thousand, but can freely raise the price by any amount exceeding 20 thousand rubles.

If you win, receive the documents, pay the remaining cost and register the property in the prescribed manner.

Documents and deadlines

Any adult citizen who has submitted the following documents can buy an apartment at auction:

• internal passport proving identity;
• bank account statement indicating the availability of funds.

A number of financial institutions provide loans for the purchase of an apartment at auction. Then, instead of a personal account statement, it is allowed to provide a document confirming the bank’s consent to provide financing within the agreed amount if the client wins.

On average, the preparation and process times are:

• 1 day – registration and receipt of an electronic key with a subsequent validity period of up to a year;
• 5 days – the period no later than which you must register to participate in a specific auction;
• an interval from several hours to several days is the time of the actual event, depending on the activity of the applicants.

The search period for a suitable apartment and the list of participants is unlimited. However, if less than two potential buyers participate in the auction or not a single premium is made during the sale of the apartment at auction against the starting price of the pledged property, then the auction is declared invalid (Article 58 of Law No. 102-FZ).

Models of participation in government procurement of real estate

Model№ 1

 — Participation on behalf of the owner
This scheme is extremely rare, because owners do not want to dive into the topic of government procurement; for them it is extremely difficult. And those who agree sell their property with the help of special organizations or representatives. The specialist helps in preparing an electronic signature, registering in the Unified Information System, opening a special account, participating in auctions, and concluding contracts. Thus, all actions occur under the control of the intermediary.

Important point!

If the documentation specifies the requirement that only owners can participate in the procedure, then in this case Model No. 1 is the only possible one.

Model№ 2

 — Participation on behalf of an intermediary (representative)
This option can be used by realtors and tender specialists. You need to find a suitable premises and act as a representative. It will be very difficult to explain the interaction algorithm to the owner, conclude an agency agreement with him and obtain a power of attorney to represent his interests (certified by a notary).

After winning the auction, it is important to draw up an additional agreement indicating the owner as a participant in the legal relationship. After receiving the money, the owner transfers you a percentage for the services. Moreover, the commission is agreed upon immediately so that there are no misunderstandings in the future.

Model№ 3

 — Buying an apartment for a won tender
The scheme of actions is similar to the scheme described in Model No. 2. Only after winning the apartment is bought from the owner, the purchase and sale agreement is entered into Rosreestr, and then resold to the customer. This is an expensive option, it is suitable for those who are ready to invest and have a financial reserve.

This option has its drawbacks. If the customer does not accept the housing, then it will remain with you. And in the future we will have to look for a buyer for it. It may turn out that you freeze your money for a long period.

Important point!

Before deciding to buy, agree on the apartment with the customer to determine whether it meets his requirements. 

How to buy an apartment at a state auction

Usually, to participate in an auction you need to come to the auction organizer in person.
They will give you a sample application to fill out. They will tell you where to make the deposit. When you do everything, you will become an official bidder. If you are the only applicant, you will automatically win. Receive the protocol and buy the property.

If there are several participants, then the auction takes place differently:

• Participants must submit the price in a sealed envelope in advance
  . This practically shouldn't happen. But sometimes organizers publish a closed bidding format in documents.
• Participants bargain during an auction at a predetermined location. Please note that the auction has a step - a minimum raising amount. You cannot place a lower bet.
• Participants trade in an electronic auction
  . This requires an electronic signature. Sniper tactics are prohibited. By raising the price of the lot, the participant extends the auction for some time. Usually for 30 minutes.

The auction format is defined in the documents.
After the auction, the winner receives the auction protocol. Then enters into a purchase and sale agreement with the organizer or final seller. The winner pays the balance and becomes the owner of the property.

Documents with details of the auction. You can view it in your browser without downloading. Usually it is written who is conducting it and where, the application and bidding form

How to view an apartment before bidding

In most cases, no way
.

If you're lucky, the auction organizer will post photos on the website. This rarely happens.

Even less often do they organize viewing days for everyone. The property is shown simultaneously to everyone who has signed up in advance. Viewings are usually carried out on weekdays during business hours

auction organizer. Get ready to take time off.

Most often, you will only have the address and map marker from the lot description. All. Next, do it yourself. Come and look at the house from the outside, chat with neighbors, look for clues on the Internet. The organizer is only responsible for conducting the auction.

Step-by-step instructions for making money on real estate in government procurement

Guide to action:

1. Register as an individual entrepreneur / LLC;
2. Create an enhanced qualified electronic signature;
3. Register in the EIS;
4. Open a special account;
5. Find current tenders on the EIS website or in another paid system;
6. Study the documentation, technical specifications and draft contract;
7. Find suitable property;
8. Convince the owner (realtor) of the deal;
9. Obtain from the owner electronic copies of all necessary documents and a power of attorney, and conclude an agency agreement;
10. Deposit an amount into a special account to secure the application;
11. Prepare and submit an application;
12. Take part in the tender;
13. Win;
14. Deposit security for the execution of the contract into the Customer's account or prepare a bank guarantee;
15. Conclude a contract with the Customer;
16. Hand over the object to the Customer (the object is handed over by the owner);
17. Register the transaction with the registration chamber (the owner submits registration documents);
18. Receive a commission from the owner.

What investments will be needed for work?

For example, you have chosen to work as a mediator. What costs lie ahead?

1. Registration of individual entrepreneurs –

the most common type of organization. The state duty will cost 800 rubles. And 1000-1500 rubles for printing.

2. Opening a current account and special account

Check this information with banks. Most often, opening an account is free.

3. Registration of an enhanced qualified electronic signature –

it will cost 5000-7000 rubles.

4. Registration in the Unified Information System and accreditation on electronic platforms –

is free, but if you want to reduce time and contact specialists, their services will cost 3,000 - 5,000 rubles.

5. Notarized
power of from the owner
This kind of notary services will cost 2000-3000 rubles. The owner of the premises agrees in the text to the preparation and submission on his behalf of documents to the site and participation in the procurement.

6. Money
to secure the application and ensure the execution of the contract
Most likely, for these purposes you will need to have your own finances, because bank guarantees are rarely issued to beginners. A pleasant fact is that the deposited amounts will be returned to you later.

To secure an application you need to have 0.5% - 1% of the NMCC. Most often it is equal to 1% of the NMCC. If the NMCC is 2 million rubles, then the amount of the application security will be 20 thousand rubles.

The size of the contract performance security is 5%-30% of the NMCC. If the purchase is intended for small and medium-sized enterprises, then the amount of security is calculated based on the price offered by the winner. Most often, the OIC is 5% of the NMCC. If the initial price is 2 million rubles, then the size of the OIC will be 100 thousand rubles.

7. Payment for winning on
the ETP
Legislation allowed sites to charge a fee from winners. Its size is equal to 1% of the NMCC, but not more than 5 thousand rubles excluding value added tax. If the purchase is for SMP, then the maximum amount should not exceed 2 thousand rubles. Money is debited from a special account.

8. Paid systems for searching tenders

EIS provides a free information search service. But paid systems are much simpler and more convenient. Using them on average will cost you 2-3 thousand rubles/month.

9. Communication and Internet services –

it all depends on your operators.

10. Room

There are apartments that require renovation, and the owners do not always have the money for this. Therefore, you must be prepared to spend money using the services of construction crews. In some cases, the apartment will need to be purchased, then you can attract investors or take out a loan. Carefully draw up a business plan so as not to incur losses.

11. Current expenses

Finding an apartment is a long process, it can take 2-3 weeks. And the transaction itself will take 1-1.5 months. During this period you need to live somehow, so it is important to have a financial cushion so as not to worry about money for some time.

Participation in this niche is very expensive, and you cannot do without expenses.