Things to Consider When Buying a Repossessed House

Repossessed Houses are everywhere. A substantial number of them are in South Africa as in other countries. They present a good opportunity for anyone seeking to buy a new home because they come at a very competitive price. However, before buying a repossessed house, here are a few tips to consider:

Just Before You Buy

Repossessed houses are generally very good bargains. So before buying one, do an extensive research on its fair value, title deed, location and so on. You should seek help from professionals on any of the aspects you are not clear about. Your lawyer is a good one to ask.

Commissions and Initial Deposits

Almost always, it is required to pay an initial deposit on the repossessed house before the deal is sealed. Most times, it is just 10% of the property's price. However, if you are unable to come up with the remaining balance on the property, the deposit will be lost. The Sheriff also gets a commission too.

Other Payment Terms

The Sheriff will, in many cases, require a cash payment or cheque at the end of the sale. However, if for any reason you fail on the terms, the property will go back on sale and you lose any money paid earlier.

Is the Property Occupied?

In certain instances, the repossessed property may still have some occupiers. Knowing if such is the case is important as you will be responsible for getting the place vacated and moving out the personal properties of the resident's left behind.

Is there any Restrictions on the Title Deed?

Scheme usage and town planning restrictions are some of the many restrictions that may be attached to the property in question. You should find out about all such restrictions. This may save you from a lot of unnecessary stress and worries later on.

"As It Stands" Clause

As it stands clause is pretty common with repossessed properties. It is your responsibility to find out if there is one on the property by visiting the property to assess the general state of the house.

Property in Possession (PIP)

In certain cases, the banks holding the mortgage on a property may decide to buy it if the bids made are too low. This is done to pay off the debt on the property and when this happens, the home becomes a Property in Possession (PIP).

When this occurs, the bank seeks to sell the house as soon as possible to lay off the cost being incurred in maintaining the property and to pay off some of the expenses already incurred on the house.

For those interested in such properties, getting them is easy. As long as the buyer is not a tax vendor, he doesn't have to the normal transfer duty to the revenue service. This is because the banks get to pay for the VAT.

Buying a repossessed property is no doubt a good financial deal. However, it can go wrong if not handled well. So before you get one, consider some of the tips above or seek professional help.