What are repossessed / foreclosed homes?
Repossessed and foreclosed homes are properties which have been taken control of by a loan company after the borrower does not pay their home loan. Repossessed homes in Australia can be refurbished and re-marketed at a much higher price, so are an excellent way to start your real estate investment portfolio.
Distress properties are actually quite common in Australia but most people don’t know where to find them. After the mining collapse investors who know strategies to get discounted property are cashing in.
Investing in a repossessed or bank owned residence is probably one the greatest options available in property investment. Because lots of people struggle to make repayments on their mortgages, there are plenty of repossessed or foreclosed houses available on the market. As loan providers are not seeking to generate a profit on these kinds of homes, investors can frequently come across excellent houses, well beneath market value prices.
Can I buy a distressed property in Australia?
Yes! And here are some common places to find them.
Using a strategy not many people know about taught at Dominique Grubisa’s ‘Real Estate Rescue’ course you can get in touch with distressed sellers through the court listings. It’s fairly simple but requires some effort to get in touch with them. Dominique’s mentor students get emailed a list of people who are appearing in court and could be willing to sell their house to settle their debt.
You can typically come across foreclosed properties on local internet property sites, even though they won’t always advertise that the property is repossessed. To find bank owned properties, look for sales listed for a low price, with no photographs, a general guide price and limited descriptions.
Real Estate Agents
Often real estate agents will have repossessed or foreclosed properties for sale, but they won’t advertise them. Check with your local agent with regards to repossessed, foreclosed or distress sales. It is usually most effective to approach larger estate agencies, however, sometimes smaller agents will also have repossessed or foreclosed homes for sale. Estate agents are also often linked to auction houses, so remember to ask your agent where to find local auctions in your area.
Lenders often sell repossessed and foreclosed homes at auctions in an attempt to get rid of properties as quickly as they can. If you are looking at purchasing a foreclosure at auction, ensure that you have the funds available up front. If you are willing to buy at auction, there is a brilliant prospect of obtaining a greater bargain than usual. The reason for this is that once your bid has been accepted, nobody else can make a higher bid, as you have effectively exchanged contracts.
If a real estate agent has received an offer on a property, they advertise it for a number of days in a newspaper. This procedure is called the ‘notice of offer’. Estate agents use local newspapers to do this and adverts will appear in the residential or small advertisement section.
The benefits of buying a repossessed home
The obvious benefit of buying a bank owned home is that you can purchase it at a much lower price, as lenders want to get this type of property off their books as quickly as possible. Since the price you paid will be below the market rate, should you decide to sell the repossessed home at a later date, your investment could provide you with a large profit.
This is an good situation for the seller and the buyer. The seller gets a quick sale and the buyer gets a huge discount. This sounds great but there are a few things you need to know before buying a foreclosed home.
Lenders strive to sell repossessed and bank owned properties fast, as an empty house means that they lose money. When a lender takes back a property, it has the responsibility of reclaiming as much money as it can. Whilst most sellers spend months waiting for the right offer, lenders often put a low price on them to sell bank owned homes quickly.