IL Postcard

A Two-Bedroom Apartment for $6,000…and Other Bargains

Date: 12/21/2007

Friday, Dec. 21, 2007
Montevideo, Uruguay

Read more about Uruguay in International Living Postcards--your daily escape

“Vendido” announced the auctioneer, “por $6,000.” At first, I thought I’d misunderstood--there’s no way a two-bedroom apartment could sell for that price.

But I was wrong. As it turned out, low prices were the order of the day.

Unlike my last Uruguay property auction, which took place in an old Colonial building on folding chairs, today’s remate is being held in two large, red-carpeted auction salons at the Uruguayan government’s central mortgage bank. Each salon has a large movie screen in front, where the properties are displayed. In total, there is seating for about 150 people. Today, it’s standing room only.

The bidding begins at shortly after 1.00 p.m. and closes at about 5.00 p.m., during the last three workdays of each month. The pace is rapid, with a property being sold every 15 minutes, so you’ll need to stay on your toes to keep up with the proceedings. When they have many properties to auction, the bank opens a second salon, and gets through two properties every 15 minutes. I’ve seen as many as 80 properties sold during these monthly three-day sessions.

Many of the houses and apartments at auction are small and are located in poor neighborhoods, so it’s important that you see the property and the neighborhood ahead of time, so you know where and what you’re buying.

The people bidding at this auction were a mix of people: those looking for a place to live, investors who intended to fix up and flip the properties, landlords shopping for rental units, and two U.S. expats. Most people attend with specific properties in mind. All properties have a base price, and you must bid at least that much to win. (The average base price in Montevideo is around $13,700.) If no one bids--which happens in about 20% of the cases--the price is reduced and re-auctioned at a later time.

While many of the properties are in undesirable locations, you’ll always find a few gems.

One example is a 1,144-square-foot home we went to see on Calle Rio Negro, just one block from the water. With a balcony and a water view, it had three bedrooms and two baths. It sold for just $23,000.

One small house was offered at a floor price of $2,676, but no one bid on it.

I looked at the $6,000 apartment I mentioned at the beginning and found it was located on Calle Cuestas in Ciudad Vieja, Montevideo’s original historic district. Calle Cuestas is in a rundown neighborhood, and I decided that I wouldn’t want that apartment if it were free. But soon afterward, another auction took place, and the abandoned hotel in front of the $6,000 apartment was sold to a Greek shipping tycoon for $3.3 million. Restoration is now beginning, and the whole area is expected to flourish.

As it turns out, the young man who bought that $6,000 unit made a terrific investment.

Lee Harrison
Roving Latin America Editor, International Living

P.S. Prior to bidding on a property, be sure to retain competent legal council so you understand your obligations and rights for each of the four types of auctions. My preferred contact is Juan Fischer, at Jfischer@lvm.com.uy.

Editor’s Note: Lee Harrison has written a special report on buying property at auction in Uruguay, showing you how to pick and choose from hundreds of hot properties in the most desirable neighborhoods…and pay just pennies on the dollar.

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- Pay a LOT Less for Property at the Uruguay Auction

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