A house usually gets repossessed when the owner of the house is not able to make his monthly payments to the bank. Since the bank too has lost money under the circumstances, they need to sell it fast in order to make their losses good as a result of which repossessed house are sold cheap. If you have never bought property before, there are certain things to keep in mind if you are in the market to buy a repossessed house.
Houses Repossessed by Banks
As much as there are advantages in buying a repossessed house that is going cheap, there are certain things you should be aware of when involved in this kind of purchase. Houses that are usually repossessed are not in the best of condition mostly because the property owners do not have the kind of money to keep them well maintained. Even if you get the house at a cheap rate, it could be extensively damaged and need intensive repairs before you can make use of it. Therefore always keep in mind to make allowance for any renovations or damage repairs that have to be carried out when you buy the house and add it to your budget and see if it’s worth your while. Your first option should be to ask the bank concerned why a certain property is being sold. There are many instances where the owners have tried to sell the house themselves before being repossess by the bank and failed; either due to the condition of the house or due to it being situated poorly or in an area which has a reputation for theft and crime.
Banks normally are very happy to help customers buy repossessed houses because these properties are normally a headache to them as well. They have to throw money in order to keep the house in good shape with the garden well maintained and security guards hired to look after the property all of which is extra expenses for them. This is where the buyer scores by being able to take it off their hands cheaply. The buyer however must be well aware of what he is getting before paying any money to the bank.
What to look for when buying a Repossessed House
- Banks usually have a list of properties that have been repossessed. You can inquire from your local branch or even try an Estate Agent. It is much wiser to deal with a bank in case you need a loan to purchase the house.
- Carry out a thorough check of the house, preferably with an architect to assess how much renovation has to be carried out. Even if you get your house very cheap, add this extra amount to your estimated value and see if it’s worthwhile.
- Check the area to see if it’s a convenient location with availability of super markets, schools, distance to the main road and city and most importantly whether the area is safe from crime and theft.
Advantages of buying a Repossessed House
The greatest advantage is not having to pay transfer fees since the bank being the owner of the property is liable to VAT. You will however have to pay the attorney the registration fees for transferring the property in your name. This is nothing when you think of the transfer fees you would have had to pay for a new house.
Never think of buying a house in a hurry just because it’s going cheap. With the current market on houses as it is, there are enough and more houses to go around, with most of them being repossessed by the banks and South Africa is no different. Have patience, do your homework well and barge in at the right time when you might get the bargain of a lifetime.