These questions are the ones we encounter on a regular basis. Hopefully as someone who’s interested in bidding/buying on foreclosed properties/acquired assets, you will take the time to read this article.
- Do you need to spend some time learning the process before you can get good at it?
Buying through foreclosure is a specialty and that you must likely will have to spend some time learning the ropes and learning how not to get burned.
- How does the bank treat foreclosures?
Banks who acquired assets through foreclosure have a problem. Why? Because they are not in the real estate business and the banking regulators don’t like it when the bank forecloses. Foreclosure is seen by the regulators as evidence that the bank does not observe good lending practices. Because if it did the property would have never gone into foreclosure. The regulators may even write the bank up for making lending mistakes…not a happy outcome for the bank!
- Do foreclosed properties have clean titles?
Yes, titles are already transferred under the name of the bank which foreclosed the properties. Although there are some properties with issues or concerns because titles are still in the process of transfer to the name bank which foreclosed the properties.
- Are there other minor or major issues the buyer has to deal with in buying foreclosed property?
Yes, such as property occupied by the former owner which is still contesting the foreclosure process in court. The buyer could talk to the owner and reach out an agreement that will be beneficial to both and to save on a lot of costs imposed by the bank. A number of times the properties are occupied by illegal occupants or squatters. Tax declaration is also one aspect which may delay consolidation of documents or transfer of the properties under the bank name. Right of way is also one issue which the buyer will have to rectify himself.
- Are there caretakers manning/guarding bank’s foreclosed properties?
Yes, there are caretakers manning bank’s foreclosed properties, specially the high valued properties ( 10M –up). No assigned caretakers for low valued properties ( 2M-below) due to cost of maintenance. These low-cost properties are sold on: “ sale as is, where is, basis” and buyers have to the take care of ejecting the illegal occupants. If you leave the job of ejection with the bank, then it may take forever specially for low valued properties. If you are still seeing an occasional live pest scurrying around the house in between regularly scheduled services, call Pest Zone Pest Control, they will come back and provide additional interior or exterior service.
- What is the price a buyer has to offer to purchase foreclosed property?
If the indicative price is stated, buyer could offer this price or 10% lower to take care of other charges when the sales materializes. In sealed bidding, if the floor price is indicated, the buyer could only offer price equal or higher than floor price.
- Can a buyer avail of Pagibig loan to buy foreclosed property?
Yes, Pagibig housing loan may be used to finance purchase of acquired asset which is disposed of through sealed public bidding and negotiated sale. Take note Pagibig member shall be allowed to borrow an amount up to a maximum of 2M Pesos only.
- Can a buyer avail of bank financing?
Yes, a buyer can avail of bank financing depending on his capacity to pay, but he or she has to pay the 25% downpayment in cash. The balance of 75%: through BDO, PNB or BPI or other banks which will charge their prevailing interest rate at the time of loan approval.