Recently, on social media platforms in Hangzhou, there has been a widely circulated story with dramatic and ironic elements: a citizen who was originally helping a friend to raise the price at a foreclosure auction inadvertently ended up becoming the final buyer of the property. This absurd drama not only left the individuals involved in a predicament but also quickly sparked strong resonance and deep worries among netizens regarding the current real estate market and the potential risks of foreclosure properties.
In recent years, the foreclosure property market has become a “treasure trove” in the eyes of many homebuyers in Hangzhou. According to statistics from the Chao News Institute for Better Living, in 2024, a total of 1433 residential foreclosure properties were sold in the ten main districts of Hangzhou, showing a continuous increase compared to 1171 properties in 2022 and 1398 in 2023. Additionally, according to data from the China Index Research Institute, the clearance rate of foreclosure properties in Hangzhou was as high as 76.7% in 2024. The increasing attention to foreclosure properties is partly attributed to the pricing factor.
On platforms like Ali Auction, it is common to see properties with starting prices significantly below market value. Many potential buyers are enticed by the possibility of striking a bargain worth millions, leading to mixed sentiments towards foreclosure properties, with some cautioning against solely pursuing cheap deals.
One recent story circulating on Hangzhou’s social media involved a local citizen who unwittingly became the buyer of a foreclosure property, confirming the skepticism surrounding such transactions. According to the individual’s recollection, his friend, a fellow from Jiangxi whom he had known for over a decade in Hangzhou, faced financial troubles in 2023 due to private loan disputes, eventually resulting in his property being foreclosed. The friend reached out to him before the auction, asking for assistance in raising the bid. Despite initially agreeing, the situation took a turn when he found himself as the final buyer of the property.
The individual mentioned that after completing the necessary procedures for the foreclosure property, he promptly listed it on a real estate platform as he already had his own residence and viewed the property as a burden. Despite initially setting the listing price at 2.98 million, attempting to make a profit, there were no takers until he lowered it to the auctioned price of 2.65 million, which remains unsold to this day.
The story of the aforementioned homeowner has stirred discussions among local netizens. Some speculate that he might have fallen into a trap set by his friend, suggesting that all three bidders at the auction could have been associates of his friend.
Others online believe that the difficulty in selling the property stems from its foreclosure status, which deters many buyers due to existing emotional and market concerns, despite being offered at a discounted price during the auction.
Foreclosure properties in China, introduced as a form of online judicial auction in 2017, have intrigued many individuals with the possibility of purchasing properties at below-market prices through platforms like Taobao and JD.com.
Despite the allure of foreclosure properties for some as a chance to secure a good deal, there are risks associated with such transactions that cannot be overlooked. Videos showcasing the challenges faced by buyers post-purchase serve as cautionary tales, highlighting the perils of blind property acquisitions.
The narrative surrounding foreclosure properties has become akin to a “real estate blind box,” where the outcome may not always align with buyers’ expectations. With this significant financial investment, there is no provision for returns or refunds within a grace period.
Recently, the Nine News Mirror Studio reported on the pitfalls of “treasure hunting” in the realm of foreclosure properties in an article titled “In the Trap of Foreclosure Property ‘Treasure Hunting,’ the Tears of the Genuine Homebuyers.”
Guo Bin, a foreclosure property intermediary from Chengdu, advises buyers to steer clear of around 10% of properties in the foreclosure market, emphasizing the high stakes involved. For those who encounter misfortune, the perceived savings from foreclosure properties could cost them dearly.
According to statistical data from Law to Auction, a judicial auction service provider, around 30% of foreclosure properties arise from private loan disputes involving homeowners, followed by cases linked to gambling and debt guarantees accounting for 30% and 40%, respectively, such as acting as a guarantor for acquaintances in loan transactions.
Li Wei, employed in HR in Hangzhou, found himself unable to afford his ideal home due to financial constraints. Turning to foreclosure properties as a potential solution, Li Wei discovered that despite the affordability and opportunities for bargains associated with them, there are significant risks involved, as illustrated by numerous cautionary tales circulating online.
From the Hangzhou citizen who transitioned from being a “bidder’s assistant” to becoming a reluctant homeowner of a foreclosure property, to prospective buyers like Li Wei who hesitate due to the perceived risks, these personal experiences collectively paint a complex portrait of the current real estate landscape in China.