Tips for Repossessed Property

The purchase of repossessed property has become quite a favourable option among first time buyers. The recent increase in the supply of repossessed property has created quite an optimistic spirit over this unique opportunity for investors and first time buyers.

A good example of the benefits would be to look at a situation where a person is merely looking for a house of their own but due to a tight budget can’t afford property priced at the full market value. This potential purchaser is now able to look into buying a repossessed property at a substantially cheaper price. These repossessed properties were reclaimed by the lender due to the debtors inability to keep up with monthly instalments.

Before such repossessions, a grace period is given to the owner in order to offer the opportunity to repay the missed instalments or to approach the bank with an alternate but suitable payment plan. Should the owner still be unable to repay the outstanding amount during this grace period, the ownership of the property then falls to the bank who may resell it again.

Consider the following should you wish to purchase a repossessed property;

1) Even though a repossessed property is a favourable option, they are tricky to find. A reason for this is that a loan buyer is unlikely to disclose the fact that the property is currently going through repossession. This is done in order to uphold a certain image and to avoid the label of ‘home breaker’. Online property listing companies however, are able to provide you with an extensive list of available repossessed properties.

2) As you may already know, when looking to purchase a repossessed property it is important to remember that it may not always be in a good condition. This may be due to a shortage of money or the fact that not every property is situated in a appropriate area.

It’s a common misconception to say repossessed properties are sold at dirt cheap prices, however, this all depends on the outstanding balance still owed on the loan.

3) When it comes to bank repossessed property, two surveys are made to assess the market value. When the price is established its put up for auction where the highest bidder is the winner.

With a few simple repairs and renovations a repossessed property holds the potential to become a very profitable venture. Finding a repossessed property however, is a process that should be approached with patience and revere.

Buying Repossessed Property: Guidelines

Repossessed property often brings to mind the endless images of abandoned homes in ruins and the odd tumble weed driven forward by the wind. A remembrance of good times gone bad. When you find these thoughts slowly creeping into your mind, remember the potential they carry to be the symbol of hope to countless want-to-be homeowners. If you are a potential first time property buyer or an investor on the lookout for excellent bargains, repossessed property is exactly the thing you need.

* The first part of buying a repossessed property involves selecting a property you wish to purchase. Simply go online and register with a sound property listing company in order to view the various houses up for auction, as well as their various viewing dates.

* Once you have decided upon a property, attend its viewing. In so doing you will be able to spot any essentials, such as leaks, cracks and any other necessary repairs. A viewing such as this will help you to assess whether or not the house is worth buying.

* For first time buyers, auctions on repossessed property differs quite a bit from a usual property purchase. Once the highest bidder wins, the deal is practically finalized and backing out may be a pricey mistake.

* Even though this simplifies things tremendously you now become responsible for handing over a deposit on the day of your winning bid, which you would have to part with should you decide to change your mind and back out.

* Be mindful of the fact that repossessed property has been vacant for ‘X’ amount of time, therefore it may require some repairs. Remember to account for these when looking at its purchase price to ensure that the property is worth your while.

With any luck you should now have come to the realization that there is a lot more to repossessed property than meets the eye. Buying repossessed property doesn’t just revolve around finding the best deals or buying at a bargain. It’s essential for you to always be aware of what lies ahead. With some patience and perseverance that dream house may not be as far from you as you imagine it to be.

Please Note: at Mortgage Plus we offer 100% home loans on repossessed properties.

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Property investing: Timing is key

An investment in the housing market remains an excellent long-term investment as long as investors time it right. www.mortgagepluscc.co.za

The ideal is to buy when the market is at a low point and sell when it’s peaking, which is rarely possible, say property analysts.

Fresh research done by property analyst Lightstone shows that home buyers that bought and sold in the period between January 2008 and January 2009, have probably suffered a loss.

However, it is unlikely that buyers who have a five-year view will suffer the same fate, says Jacques du Toit, senior property analyst at Absa.

Hayley Ivins, property analyst at Lightstone, says a home buyer who bought a house for R1m in January 2008 when the market peaked and sold it in January 2009 when the market tanked, probably achieved a price of R960,995. This represents a drop of 3,9%.

But a buyer who bought a house for R1m in January 2008, and sold it in May this year, would have received R1,053m – an increase of 5,3%. A buyer who bought a house for R1m in January 2010 and sold it in May 2010, would have achieved a price of R1,096,500m, a rise of 9,65%. www.mortgagepluscc.co.za

Ivins says it shows that the housing market has made progress as far as prices are concerned, but the transaction volumes are still low.

Lightstone’s house price index looks at where the market is at right now in terms of total transactions, distressed sales and houses that have been sold for a lower price than the previous sales price. This index is regarded as a reliable measuring stick as it compares the prices of houses sold to the price that was previously paid. It is based on Deeds Office data.

Du Toit says to get the timing right will be nearly impossible, but buyers and sellers have to make their decision in light of trends in the market at a given point as well as the future expectations. “If the expectations are that prices will fall in the near future, the buyer might want to wait a little bit. But if it is expected that prices will rise, he has to jump in and buy.”

He says for the seller it is imperative to look at current prices and compare this to what he paid.

It is important for the buyer to look at where the level of the price currently is compared to a while ago. “For the buyer it is about affordability and if he’s getting value for his money.”

He says the current information available in the market can be used for this. This includes broader economic data and the house price data, which indicates broader trends in the market. – Elma Kloppers, Sake24

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Complete this short form online
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