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The Basics of Buying Foreclosed Properties

Maybe this is first time you’ve come across Foreclosed Properties in the Philippines, maybe you’ve invested in real estate properties for years – whatever motive you have for ending up on this site, here are a few of the things you need to know about foreclosure (or perhaps you already know them? How about a refresher?)1. What is your motive for buying foreclosed property? Check if you have enough money to buy the property – more than the indicative price as you have to factor in the taxes involved as well as possible costs of repair of the property (if any). Do you have the patience to process all the paperwork to acquire the property? Maybe foreclosures isn’t for you, if you don’t have the patience to inspect the property, or fill up the necessary application forms and fulfill requirements.2. Should you wish to purchase, there are 3 ways to buy foreclosed properties. Each have their own steps in acquiring the property:
a. Win at an auction, outbid all the other bidders for the foreclosed property.
b. Buy the property from the owner before the bank acquires the property (also called pre-foreclosure)
c. Get a listing from the bank, make your offer & win through first come first serve or through bidding.3. Practice Due Diligence. Pictures can only say so much. Visit the property, inspect carefully and thoroughly. You’ll be shocked at the number of times investors have won at foreclosure bidding only to find out the property doesn’t measure up to what they saw on the picture. At the same time, obtain a copy of the title and check for liens/encumbrances at the register of deeds in the area where the property is located. a. A lien is a legal claim against a property. Unpaid contractors, unpaid association dues, mortgage, loans, are just some of the examples of liens. Remember that because foreclosed properties are sold on an “as is where is” basis, you’ll be the one responsible for these liens/encumbrances.4. Most properties get foreclosed because payments are no longer made. And if there is no money, the previous owner will naturally have no money to maintain the property. Hence maintenance is neglected – which also means repair is necessary. It’s also common for previous owners, when their house is foreclosed, to bring items with them – from the front door knob to the whole door. Get professional opinion before deciding to make an offer. Sometimes the cost of the repairs is bigger than the actual amount of the property.5. See that person living in that foreclosed property? It can either be a former owner or an illegal occupant and can’t be asked to leave! There are 2 things to expect when this happens – you can be treated with hostility especially if you want to view the property, or be surprised when asked nicely, they will give you access. Again, if you decide to push through with the offer for the property, you’ll be the one to eject the one residing there.You want your first time in investing in foreclosed real estate properties to be as completely smooth as possible – and this can happen if you anticipate the road blocks ahead of you. Who knows? You just might enjoy investing and do it again! Good luck!