Buying a bank repossessed home may sound like a strange idea. But truth be told, following this process can save you a great deal of money and time – especially when you intend to buy the property as an investment.
So, how do you do it?
Stay with us as we uncover the ways you can buy a bank repossessed home.
A Bank Repossessed Home: What Does That Mean, Exactly?
So, what exactly do we mean by a property that has been repossessed by the bank? That is to say, what even is a bank repossessed home?
For starters, it’s important to be aware that if the previous owner of a home is unable to meet their mortgage repayments, the home loan provider, or the ‘lender’ – which is, in most cases, the bank – is fully within their rights to seize the property in question back into their possession.
When you enter into a home loan agreement with a bank or lender, you need to be aware that you will only actually own the property once your mortgage is fully repaid. As such, if you prove unable to repay your home loan at any point, the bank will take back what is theirs! As part of this legality, borrowers who default on their mortgage repayments forgo their right to live in the property, and the bank will repossess their home.
Why Would I Want to Buy a Bank Repossessed Home?
While admittedly very sad for the previous owners, the benefits for a new house hunter in terms of purchasing a home that has been repossessed by the bank are great.
To clarify, as the property is now back in the bank’s possession, it is no longer titled to a specific individual. As such, if you buy a bank repossessed home, you will not need to pay title transfer fees! Further to this, you will also have more room to negotiate the property sale price – especially if the home has been sitting empty for a while. This makes bank repossessed homes excellent investment properties, as you will likely be able to resell the property at a relatively high profit.
Buying a Bank Repossessed Home: How Do I Do It?
If you’re keen to go about the process, the steps for securing a bank repossessed home generally involve:
1. Finding a Locally-Based Real Estate Agent
Like purchasing any property, if you want to buy a bank repossessed home, it helps to engage the services of an agent. Employing a locally-based real estate agent with knowledge of the area, as well as what bank repossessed properties are available, can help you immensely with the process. The agent can even assist with negotiating with the bank on your behalf, making the process even easier for you.
2. Doing Your Research into the Repossessed Property
Make sure to do your research into the property, and the property location, to identify any potential issues. Is there a reason the property was repossessed by the bank? Perhaps, there is a high unemployment rate in the area, which could indicate future issues with meeting mortgage repayments.
3. Budgeting for Any Home Repairs That May Be Required
If the previous homeowners didn’t have the funds to keep up with their mortgage repayments, it’s also likely that the upkeep of the home has also fallen into disrepair.
As such, if you’re buying a bank repossessed home, you’ll need to make room in your budget for any maintenance work that will need to be done around the house.
4. Preparing Yourself Financially for a Fast Transaction
When purchasing a bank repossessed property, get prepared for a quick sale! You’ll need to have your funding ready almost straight away to enable you to snap up the property quickly.
As well as this, the conditions of your purchase may be more restrictive than normal. For instance, the usual cooling-off period might be waived, and as well as this, there may be a more rapid settlement date.