There are several situations that lead us to want to buy a property. It may be that you are looking for a house or apartment because you intend to get married in the coming months, because you need another room or because you have a certain urgency to move. However, if you are not in a hurry to buy a property and want to start paying little by little – and still interest-free – the real estate consortium may be right for you.
In Brazil, sales of real estate consortiums have grown considerably in the last few months, mainly in Belo Horizonte, where this increase hit the 40% range! Across the country, more than seven million consortium plans are sold and more than one million consortium members are contemplated.
For this reason, the real estate consortium has established itself as an interesting option, especially for those who are not looking to change their residence urgently or do not want to bear the interest on real estate financing .
How does the real estate consortium work?
In general, the real estate consortium, as well as the other consortium plans, is the union of individuals or companies that aim to self-finance through savings managed by third parties.
There are two profiles that lead the top of the list of adherents to the real estate consortium: those who do not have the urgency to move or do not have the discipline to save the money intended for purchase.
When joining the real estate consortium, the consortium member must contribute monthly with the amount of the agreed installment, which will be included in a common fund to all participants to finance the properties.
When the consortium member is drawn, he receives a letter of credit, a financial document that makes it possible to contract the desired property.
To acquire a letter of credit, you must sign an Adhesion Contract, which contains the rules for conducting the contracted business, such as:
- credit value;
- value of installments;
- contemplation conditions; fees (such as the administration fee and others);
- rights and obligations of the consortium member, the administrator
- Among other things.
To better understand how it all works, we made a very simple model showing a real estate consortium in practice. Check it out below!
How does the contemplation of the real estate consortium work?
Every month, all participants in the group compete (with the same conditions) for the draws for contemplation, that is, for the delivery of the property.
The number of winners will vary according to the administrator and also the size of the group – the more people, the more money collected and, consequently, the greater the chances of being contemplated more than one participant at a time.
The real estate consortium draws are carried out through meetings called assemblies. The first meeting of the real estate consortium occurs only when the group has the minimum number of quotas sold. Thereafter, they are carried out monthly and the consortium member can follow the results through the client’s area.
And, in addition to the sweepstakes, the consortium members can also be included in the assemblies through bids.
Types of bids in the real estate consortium
- Fixed Bid: When 20% of the amount of the outstanding balance is offered monthly, the one that, among all those who offer, has the quota closest to the last drawn, being contemplated;
- Free Bid: When the consortium member uses his own resource to make the bid. When contemplated, the percentage offered is deducted from the value of the installments or the number of months payable. The winner will be considered the one whose value offered represents the highest percentage in relation to the group;
- Embedded Bid: When the consortium member uses up to 50% of the value of the credit itself for the bid and the percentage is deducted from the value of the letter, after contemplation. The winner will be the one who, as in the free throw, offers the highest percentage.
How is the payment of the installment of the real estate consortium made?
The real estate consortium has a great advantage, since it is an interest-free credit alternative. However, as mentioned earlier, all groups are managed by a management company regulated and supervised by the Central Bank of Brazil (BCB).
This administrator is responsible for taking care of the financial investment of the amounts received, selling the quotas, organizing the meetings, maintaining communication with the participants and dealing with the defaulters.
Therefore, within the value of the installment, the consortium member has the obligation to pay for the common fund, the reserve fund, in addition to the administration fees and life insurance.
The common fund, as mentioned earlier, is the amount that all participants in the consortium must pay to finance the cash that will be used to purchase the assets. In other words, it is from the common fund that the balance for monthly contemplations is composed.
This monthly contribution from the fund is calculated based on a percentage of the contracted credit and, until the end of the established term, the consortium member must pay 100% of the common fund.
The reserve fund is designed to cover any shortfall in the common fund and possible collection expenses, in the event of a resumption of the asset. In general, it corresponds to 5% of the letter of credit, and this payment is diluted by the number of months in the contracted plan.
The final balance, that is, what is not used in the reserve fund, is distributed among the quotas at the end of the established term.
The administration fee of the real estate consortium exists to remunerate the services performed by the consortium administrator. Thus, it ensures that all participants have access to the contracted asset.
The management fee is a percentage divided over the months of payment of the real estate consortium. It is fixed, does not appear in the form of compound interest and is stipulated as soon as a contract is established between the administrator and the consortium member.
However, even if discrete, the interest rate must be considered before the consortium member acquires a quota. It varies from 16 to 18%, according to the credit amount and the term chosen.
Life insurance is the only optional fee. In general, the insurance corresponds to 0.3863% of the total updated initial value of the debt. It is charged from the second installment and offers coverage for death and total or permanent disability, offering the consortium member the security of discharge.
Thus, you avoid leaving any kind of burden or debt to your family members.
FAQ: Frequently asked questions about real estate consortium
When is the real estate consortium worth it?
In general, if you have no urgency to move to a new residence immediately, the real estate consortium is a good idea. This is because, although you can be contemplated in the first draws, it is also possible that you stay at the end of the line, which can take some time. So, for those who are not looking for an immediate option and want to start paying their property slowly (and without interest!), the real estate consortium is worth it.
Is it possible to use FGTS for bids?
FGTS can be used to pay installments, settle or amortize the outstanding balance. However, the resource can only be used after the acquisition of the property. In addition, for the use of FGTS, the consortium quota for the acquisition of the property must be in the name of the worker – the holder of the linked account to be used.
Can restricted people join the real estate consortium?
There is no impediment to joining a consortium plan for people with name restrictions. However, it is necessary to prove your ability to pay at the time of hiring. In addition, if you have restrictions on your behalf, you will not be able to use the letter of credit.
In general, the real estate consortium varies from 120 to 200 months, depending on the value of the letter, since you do not necessarily need to acquire a share in the total value of the desired property. After contemplation, which can occur at any time within this interval, the consortium member will have the money available for purchase.
In what situations can I use my letter of credit?
- Acquisition of new or used commercial property;
- Acquisition of mixed property (residential and commercial, which has a single registration at the Real Estate Registry Office );
- Acquisition of rural property, the guarantee being mandatory for urban property;
- Acquisition of urbanized land;
- Acquisition of urban land with construction of residential or commercial property;
- Acquisition of a parking space with individual registration at the real estate registry office.
Can a participant be excluded from the real estate consortium?
Yes. There are cases in which a participant can be excluded from the real estate consortium. Therefore, pay attention to the situations below and stay on top of the main cases in which a member may be penalized or excluded from the consortium:
- If a consortium member fails to pay one or more installments and has not yet been contemplated, he is unable to compete for contemplations at the next meetings. In order to compete again, it is necessary to pay off what you owe;
- If the consortium member has not yet been contemplated and is not able to pay the installments, there are some alternatives. One is to negotiate the payment of lower installments. However, if he seeks this resource, the credit to which he will have access in his contemplation will be less. Another option is to seek with the help of the administrator or alone someone who can take your place in the consortium. This new consortium member, in order to join the group, needs to pay the part that has already been paid by the debtor. From that moment on, he will begin to pay for the following installments. In this situation, the debtor leaves the consortium with the money that was invested, without prejudice. If none of the alternatives works, the consortium member will be included in the list of excluded people. He returns to participate in the sweepstakes, but with the proviso that, when he receives the credit,
- If the consortium member is granted credit, but is unable to pay off the rest of the debt, he must negotiate alternatives with the administrator. In the latter case, the institution may even end up repossessing and selling the property, as a way to recover the money owed to the group.
Despite the interesting points mentioned above, the real estate consortium, as well as other forms of financing, has advantages and disadvantages that vary according to the profile of each person.
In addition, there are several types of consortium plans; you just need to find which one is right for you. Therefore, the support of the consultant is extremely important to see if it is worth participating in the consortium and if the option is really ideal for your moment of purchase.