Can You Buy Bank Repossessed Properties on a Bond?
The recent rate hikes have negatively affected many homeowners. Some battle to make their bond repayments, and others, struggling to make ends meet, are forced to sell their homes. Selling your home when you’re experiencing financial difficulties, isn’t a cure-all in today’s market, either. Due to high interest rates, and the fact that banks require large deposits, people are simply not looking to buy right now. Because of this, homeowners who struggle with meeting their bond payment are often stuck with a property they cannot afford. These situations generally lead to repossession.
Banks simply do not have a lot of options when a bond-holder fails to meet their financial obligation. If a property owner misses several payments, they will be afforded a pre-foreclosure grace period. Sometimes that can be a few weeks, or possibly a few months. After that, if payments are not brought up to date, banks seek to cut their losses, and they step in and reclaim the property.
There is really very little risk for buyers looking to purchase repossessed property. The purchaser does not pay the transfer duty, and most often the bank will pay any other outstanding debts, like property taxes or monies owed to the IRS. This allows them to sell the house with a clear title. As a rule, property that has been repossessed is sold at a big discount. Not only that, but because they are anxious to find a buyer, they just may be willing to relax their lending criteria. This makes loans for repossessed houses much more assessable.
Steps for buying repossessed property are much like those used for buying any other property. If you wish to finance the home, you can apply at any bank for a bond, just as you would do on any home purchase. All banks will be able to give you a listing of their repossessed properties. Generally, dealing with the bank directly is the better option, especially if you are going to need a bond to purchase the property.
It’s always a good idea to ask to see the property. Don’t allow the cheap price to overshadow common sense. Remember, when you purchase a repossessed home, they are sold as is, so it’s smart to secure the services of an expert to inspect the home and give you an estimate on repair costs. Then, when you consider the cost of the house, figure in what you will need to make those repairs. You might want to also consider location. It doesn’t hurt to check things like crime rate and schools.
Once you’ve made your decision to purchase the repossessed property, complete an offer to purchase, and submit it to your bank. It’s at this point you apply for a home loan or bond, and you can apply at the bank of your choice. Once the bank accepts your offer, and the financing is approved, the transfer of property proceeds normally, as it would with any kind of property purchase.
