,

The Pros and Cons of Purchasing Repossessed Homes

For home buyers and investors, repossessed homes are often an attractive option when searching for properties to purchase. In most cases, this is because repossessed properties offer bargains and better prices, and for buyers looking to save on their investment, discounted values are always welcome deals.

However, while buying a repossessed home can mostly mean that you will get it at a lower price, there are also pitfalls to be wary of. Some buyers may not even realise these until they have already acquired the property.

The Advantages

Prices of repossessed homes are usually cheaper than the market value

Banks, which repossess the properties, are often in a rush to recover the amount of money owned on a property and avoid further costs such as maintenance and tax. Because of this, they may offer the property at a discounted price, sometimes even lower than the market value.

Property will be ready for moving in

Once a property has been taken back by the lender and put up for sale, the previous occupants will need to move out. This simply means that if you would like to move in to the property right after the deal has been sealed, then you no longer have to wait for the property to be vacated.

Fixed auction dates will give you time for learning about the property

When a property is put up for an auction sale, the auction date is set in advance, giving you time to do your due diligence and learn as much as you can about the property. This also means that you may be able to inspect the property and find out any potential problems.

The Disadvantages

There is a lot of competition

Since repossessed homes are priced at a lower value, more investors will be interested in the property. During auctions, this could lead to more bids, making it possible for the price to increase higher than your set budget.

Properties may need to be paid for in cash on the same day

Due to the lender wanting to recover the money due for the property, auction sales of repossessed homes may require you to pay cash upfront on the same day. In other cases, you may be required to pay partially and complete the payment within a certain period to complete the transaction.

Buyers may need to shoulder repair costs

With the nature of the transaction, if the repossessed property is in need of any repair, the buyer may need to shoulder the repair costs as the lender may sell the property as it stands.

Should I Buy A Repossessed Home?

Repossessed properties can, in fact, be a strategic investment. What we would advise clients at Twinspectors Building and Pest Inspections, however, is to make sure that when deciding to purchase a repossessed home, costs for repairs and required documents should be considered ahead to make sure that you are not going to spend more than the amount that you are willing to shell out.

In addition, you should also take advantage of the opportunity to inspect the property. If you require assistance in assessing a property prior to placing a bid, our technicians at Twinspectors Building and Pest Inspections can help you check its condition and examine any potential problems in the property.