Paolo, Sgritta, head of Sistemia, a company that manages Npls: “Over 170 billion impaired loans will arrive in front of the auctioneer. We need a common portal where all the open cases will be gathered”
The system seems to be slowly disposing of the arrears “but the true wave of judicial auctions of real estate properties will come in 3-4 years”. The forecast is by Paolo Sgritta, Sistemia Managing Director, a company that manages Npls and therefore he’s very concerned about real estate auctions.
Why do you forecast a new flood?
“We estimate that currently, the appraisal value of the properties on auction is around 70 billion euro for a total of approximately 250 thousand real estate properties. But right in these months, 350 billion euro of bad loans have been transferred by the banks. Of this amount about the half, 170 billion, will turn in 2-3 years into a new wave of real estate auctions. I believe we will exceed 300 thousand arrears per year”.
How can we cope with this new wave?
“By trying to improve the system that nowadays has clearly some flaws”.
Let’s list them …
“The first is that there isn’t a common portal where to gather all the procedures. In this way who is intending to buy a house can check directly on just one website what is the availability”.
Is today not like that?
“Today everybody says they want a common portal. But in the meanwhile, the Ministry has authorized about twenty of them with the consequence that many auctions are being missed by who would be potentially interested. This is also one of the reasons why on average an auction is empty seven – eight times before concluding the sale”.
Which at this stage is finalised at low prices, right?
“Exactly. Each further call makes the price fall by 25 per cent. Often the winning bids can be well below half of the value initially set by the expert. This is a big damage both for the creditors and the debtors, which have to face new foreclosures to pay the amount owed”.
What are the possible solutions?
“Recently it has been introduced the possibility of presenting an offer 25 per cent below the appraisal value. In this way, we skip a step. If nobody offers more, the allocation will be immediate without waiting for the next auction”.
Your company promises the banks to speed up the judicial auction process improving the sale value and shortening the credit collection times. How do you operate?
“By making more direct the communication between potential buyers, banks and real estate agencies. Often the technical appraisals are not written in order to facilitate the purchase. We transform those appraisals in a document that makes clearer the characteristics of the property”.
It’s not always easy to overcome the bias concerning judicial sales. There is the fear that there may be consequences after the purchase or threats by the former owners to the new buyers. How do you act in these cases?
“In many years of experience, I’ve seen very little threat cases as those you’re mentioning. On the contrary, the judicial sale offers more advantages than the traditional one. Not only for the price, but also for the certainty that the property is free from any kid of arrears. A certainty that the traditional sale doesn’t have one hundred per cent”.
What would be the regulation that could speed up the system?
“There was one that expired end of June and that wasn’t renewed by the Government. It implied that in the judicial sales the registration fee would be 200 euro flat, regardless the value of the property. An advantage that partly explains the increase in sales in the past two years. But the regulation has been let expiring. Mostly due to the banks that, in a quite short-sighted way, hadn’t promote it, rather than due to the Government itself”.
Will the wave of new real estate auctions protract again the sales times?
“This depends only partially on the system regulations. On the other hand, it depends on the values of the market. If they rise, the auction sales will become more convenient because based on the appraisals of the past years. I this case the processing times of the procedures will tend to decrease”.