10 Things to Consider When Buying a Foreclosed Properties

If we are looking for much cheaper properties, may advice we get is to invest or buy from foreclosed properties because they are sold lower compare to their actual market value.

Every month, there are many banks and financial institutions selling their foreclosed properties, others are in the form of public auction or bidding.

Foreclosed properties are considered non-performing assets that is why they are sold in much cheaper value through discounted sales.

If you are planning to buy a foreclosed properties, here are Top 10 tips for you.

1. Where to Look for Foreclosed Properties?

Banks, lending institution, government financial institution website. This is the first thing you should do.

Banks. For example, the Landbank of the Philippines is releasing a list of their foreclosed properties monthly. (Other Banks, EastWest, Metrobank, BDO and many others has hundreds or even thousands of foreclosed properties.

Lending Institution, government financial institution like SSS, Pag-IBIG Fund, and National Housing Authority.

The above mention entities have accredited brokers and brokerage that help them market and sell their foreclosed assets.

2. Work with a Bank or Accredited Broker 

The diligence of a foreclosed properties buyer is of utmost importance because properties are sold on "as-is, where-is" basis. But this is not easy as 1,2,3 because there are documents needed like titles that must be verified.

Working with a bank or its accredited broker or brokerage will help you settle those things and it reduces the risk of ending up with a problematic property.

3. Be Ready Financially 

Like buying or investing in any kinds of properties, you should have a capital or money for this.

Before your housing loan gets approved, the bank or the financial institution will assess first your capacity to pay. And once you are pre-qualified, you will be more attractive from other sellers.

Because of this, you will have more negotiating leverage compared to other buyers.

4. Participates in Auctions or Public Bidding 

Property auctions, usually organized by banks or real estate brokerages, are a great way to discover foreclosed properties not normally listed on property websites. Attending auctions also allows you to talk to an agent face-to-face to thoroughly discuss your purchase, seek their advice, and practically walk you through the buying process.

5. Have Some Cash to Spare

Bidding wars at auctions for the best foreclosure properties happen. You have a good chance to acquire that best property if your finances are ready for an attractive offer and ready to deal with payment terms.

Remember, buyers with down payment money ready on spot normally win the bidding wars, and may even be offered the hefty discount by the seller.

6. Never buy without inspecting a property

Always remember that foreclosed properties are previously owned. So do not expect that what you see on the website. Foreclosed properties may be not in a good shape or need a minor repair. Pay a short visit to inspect the properties so that you will not get disappointed when you already buy it.

7. Consider the Location

If you are planning to re-seal foreclosed properties, location is a very big factor to the profitability of your property. Expect that the value of your property will increase if it is situated in a high-growth area or in a developing place.

It goes the same if you are planning to buy a property close to business center. The price is much higher compared to foreclosed properties from the countryside.

8. Compare and deliberate Your Offer

Look for the market value of similar properties in the area of the foreclosed properties you are bidding for. If you are planning to sell or lease the property as soon as you have purchased it, do more due diligence and check how quickly comparable homes are selling. With this, you can be sure that you are not paying more than you should in a particular property.

9. Know Your Fees and Taxes 

Common fees shouldered by the buyers are a notarial fee, registration fee, transfer tax and documentary stamp tax. So do not be surprised if this will add in your down-payment or selling price of the property

10. Be Patient

After considering all things, you now want to buy that particular property, so you submit your Offer to Purchase to the bank. Again this is not an easy process because you have to wait if there are others who are interested too in a property you want to buy, so wait.

So the status of your bidding may take a week if you are lucky but there are some that take a month to get an answer from the bank. Your broker will inform you of any development as soonest as he can.

Remember to submit all the requirements needed to avoid rejection, but if it happens, do not be discouraged since there are many foreclosed properties nationwide.

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