Bank repossessed properties can make a good buy - but beware the pitfalls says Rawson MD
Great buying opportunities are now available to those who understand the banks repossession properties, says Tony Clarke, MD of Rawson Properties.
Right now, said Clarke, some 1 200 properties are being repossessed every month by banks whose bondholders have defaulted on their payments. Not since the 1929-31 depression have so many homes been taken back by the funders.
In these cases, said Clarke, the bank will get a court order authorising them to repossess the property and will then put it up for auction but this will almost always be done subject to a reserve price being achieved. If this is not achieved, the banks will hold onto the property and instruct selected estate agents to try and sell it.
Once the property is in the hands of estate agents, said Clarke, good buy opportunities will arise because these homes usually sell at 75 to 85% the current market value 20% down on the better prices achieved 18 months ago.
That, he said, is the good news from the buyers viewpoint but, he warned, there can be a downside.
Firstly, it has to be accepted that such properties are sold voetstoots, i.e. as they are, and that they may be in a poor condition because the owner will have been in financial difficulties and unable to maintain this property.
Secondly, having given transfer, the bank accepts no responsibility for evicting the former owner or his tenant, if these are still occupying the premises, and our experience shows that it can take months to get such people out. (
On the positive side, however, said Clarke, are the facts that all outstanding rates and taxes will have been paid by the bank, the transfer will usually be handled fast (because the banks use their own conveyancers and work on streamlined systems) and no transfer fee will be payable by the purchaser.
Rawson Properties is now a nominated estate agent for many properties in possession and, as indicated, these, says Clarke, can offer once-in-a-lifetime chances to build up a portfolio.
Article by: www.rawsonproperties.co.za