How can i buy a repossessed houses? |
Repossessed houses can be purchased in 2 ways, either directly from the sale in execution which is held by sheriff of the court at the venue or directly from the home owner prior to the sale in execution. Lets discuss the options in more detail. 1. From the sale in execution. When buying a repossessed house from a sale in execution you will need to have pre-approved homeloan unless you are fortunate enough to have the cash laying around. You then have to attend the sale in execution and register to bid on the auction. If your bid is successful the you will have to pay the sheriff's commission plus VAT, pay 10% of the purchase price and then you will be givig 14 to 30 days to conclude the sale. When purchasing a repossessed property from a sale in execution, the sale of the property becomes just like any other property purchase except that you as the prospective owner will be liable for outstanding levies(water and electricy bills),rates and taxes on the property. this can be costly so please find out what is owed before bidding on a repossessed property. You are also liable for the occupation of the property which means that you are liable to remove tenants if there are any in the property, another potentially costly experience so take care. I would now like to make an example of how this process looks financially: The house is purchased on auction for R250 000.00 1.1 The sherrifs commision: R7000.00 plus VAT to be paid on the same day. 1.2 Deposit: R25 000.00 which must be paid on the same day. Total= R32 980.00 to be paid on the day 1.3 Balance of R225 000.00 to be arranged with homeloan within 14 to 30 day after sale. Now the sale follows the normal process of sale. 2. Purchasing from the owner prior to the sale in execution The first thing you need to do when buying a repossessed house from the owner prior to the sale in execution is to get hold of the current owner. Bear in mind that this situation is very embarrassing for the current owner but note that what it would be even more embarrassing would be if his or her repossessed house is sold infront of their house with everyone to see it happening. If you get hold of the owner and they agree to sit down with you, explain why you would like to purchase their property, you might find that you could work out a rental agreement should you already have a home of your own. Explain to them that they do not have to let the sale in execution go through and that if they did that it would still leave them in debt (banks rarely use the money from the sale in execution to pay up the home owners debt). Buy selling their home prior to the sale in execution they will avoid the embarrassment while getting themselves out of debt (most home owners who are in these situations don't know that they can easily get out of them by just simply selling the house). This can be a win win situation for both you and them, they can use the funds to clear their names and purchase a new home, you can negotiate a good deal based on the desperation of their situation. If they agree, you will need them to sign a offer to purchase, this form can be easily drawn up by you and when they have signed the offer to purchase, you will need to forward this offer to purchase onto the lawyers who are dealing with the repossession. When you hand this to the lawyers, you will also need to show them that you are a willing buyer and that you already have a pre-approved homeloan. The lawyers will have no choice but submit this to the bank, if they agree to the sale, the sale in execution will be cancelled. Now you will follow the normal procedure of buying a property.
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