What are Bank-Repossessed Properties?
Bank Repossessed houses arise from borrowers defaulting on their home loan repayments to the extent that the home loan has to be terminated.
There are 3 different phases during which buyers are able to purchase these properties: ‘Distressed Sales’, ‘Sale in Execution’ and ‘Properties in Possession’These different phases may be best explained by describing the repossession process:
- borrower defaults on their home loan to the extent that the only alternative for the bank is to recover the debt via repossession;
- The bank's attorneys will apply for a judgement at the magistrates court;
- Assuming the mortgage in arrears is not recovered, the borrower’s movable assets assets will then be auctioned;
- If the sales from the movable assets will be auction still do not cover the mortgage in arrears, then the property is auctioned - a ‘Sale in Execution’. Up to this point the owner may however try to sell the property - the so-called "Distressed Sale";
- Should the bank’s reserve price not be met at the ‘Sale in Execution’, the bank has the option to buy back the property itself - a ‘Property in Possession’.
Why are Properties in Possession popular?
- There is usually no transfer duty;
- Home loans are more easily approved by banks;
- Properties are perceived to be good value for money;
- Properties have often been neglected and therefore present a good to renovate and resell.
Related Property Articles: Private Property | Property for Sale | Houses for sale in Cape Town | Farm for Sale Western Cape | Property for sale Cape Town | Property for sale in Durban | Property for sale in Johannesburg
No comments:
Post a Comment