Bulk costs (auction)

Costs of the estate, in the context of a foreclosure auction, refer to those expenses that must be paid from the auction proceeds before any other claims, as they benefit the entire proceedings. They primarily include the court’s procedural costs as well as the costs associated with the administration and maintenance of the property during the ongoing proceedings. Anyone participating in a foreclosure auction must take this factor into account when calculating their bid.

Components of the estate costs

Estate costs typically include: court fees for the local court (auction division), expert fees for the market value appraisal, administrative costs (e.g., for an appointed receiver), as well as costs for necessary maintenance measures on the property (e.g., winterization, safety measures). These costs are deducted from the total proceeds and thus reduce the amount distributable to creditors.

Court fees for the foreclosure auction proceedings are based on the value of the subject matter of the proceedings (market value of the property) and the Court Costs Act (GKG). For a market value of €300,000, court fees can range from €3,000 to €8,000. Appraisal costs for the market value appraisal, which must be prepared prior to the auction, amount to €1,500-5,000 depending on the property’s size and complexity.

Among the often underestimated costs are those associated with receivership: If a receiver is appointed during the ongoing proceedings-for example, because the property is still occupied or rented out-ongoing administrative fees are incurred, which can accumulate over months. Similarly, necessary emergency safety measures may be required if the building sustains damage during the proceedings that poses a hazard.

Priority of estate costs in the distribution plan

In foreclosure proceedings under the ZVG (Foreclosure and Receivership Act), proceeds are allocated in a distribution plan according to a fixed order of priority. Estate costs are in the highest priority class (§ 109 ZVG) and are satisfied before real estate liens, tax claims, and other creditors. This is relevant for bidders: The proceeds actually available for distribution are always the hammer price minus the estate costs.

Following the estate costs in the order of priority are: public charges (property tax), first-ranking registered land charges, subordinate real estate liens, and finally personal claims. Anyone submitting a bid should be familiar with the entire creditor structure from the land registry extract to understand which claims must be satisfied by their bid and what, if anything, the former owner may still receive.

Relevance for Bidders and Investors

Anyone bidding at a foreclosure auction should carefully read the market value appraisal from the local court-the estate costs are often already listed there or can be estimated. In addition, bidders incur their own incidental costs: real estate transfer tax (3.5% in Bavaria), land registry entry, and, if applicable, attorney fees.

The minimum bid is usually 50% or 70% of the market value, but this does not necessarily mean that the bid is economically favorable. A property requiring significant renovation, involving high administrative costs, or located in an unfavorable area can be a poor investment even at 50% of the market value. We recommend inspecting auction properties with a building inspector prior to the bidding date, if possible.

Investors should also bear in mind that properties from foreclosure auctions often come with uncertainties that do not exist in a regular purchase: unknown maintenance backlogs, unresolved occupancy issues (tenants or owners who do not want to move out), and a lack of warranty. All of this must be factored into the bid calculation and generally justifies a significant price discount compared to the market value.

Private Sale as an Alternative

For owners facing foreclosure, it is almost always worthwhile to explore a private sale early on. The proceeds from a regular sale are almost always higher than those from a foreclosure auction-and the administrative costs of the foreclosure process are completely eliminated. In addition, a private sale allows for better control of the timeline, giving owners in financial difficulty more room to maneuver.

A prerequisite is that the creditor (usually the financing bank) agrees to the private sale. In most cases, the bank is willing to do so if the sale proceeds cover the secured claim or if the shortfall is demonstrably limited. This requires open communication and a realistic price assessment-both areas where we can assist.

Practical Tip for Property Owners in Nuremberg and Franconia

Foreclosure auctions for Nuremberg properties take place at the Nuremberg Local Court; dates are publicly available via the zvg-portal.de website. If you, as the owner, fear that your property may face foreclosure, you should seek early dialogue with the creditor (bank) and explore a private sale-the proceeds are typically higher than in a foreclosure auction, and there are no estate costs. We handle such situations discreetly and professionally.

Frequently Asked Questions

How high are the estate costs typically?

That depends on the individual case. Court fees and expert appraisal costs can total several thousand euros; in addition, there are receivership costs, which vary depending on the duration of the proceedings. As a rough guide, 1-3% of the market value can be estimated.

As a bidder, can I view the estate costs?

Yes. Upon request, the local court will provide the current status of the estate costs. At the hearing itself, they are listed in the distribution plan. The expert opinion, which forms the basis of the proceedings, can be viewed in advance.

What happens to the estate costs if no bid is accepted?

If the auction is canceled or discontinued (e.g., because the creditor withdraws), the applicant generally bears the estate costs incurred up to that point.

Can I view a property up for auction before the hearing?

Generally only to a limited extent-if the owner still lives in the property, a viewing is subject to their consent. The receiver may facilitate a viewing for detached properties. The court itself does not organize viewings. An exterior inspection and review of the appraisal report are always possible.

Is buying at a foreclosure auction really worth it?

That varies from property to property. The combination of auction fees, your own utility costs, unknown renovation needs, and the risk of a difficult tenant situation makes many auction properties less attractive than they appear at first glance. Real bargains are only found in properties where other bidders are absent for good reason-and you should know those reasons before bidding.

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