Home for a steal: How to buy a distressed house
Buyers of distressed or bank repossessed homes can get up to 100% bonds and 50% discounts off transfer costs and registration fees, Harcourts Africa CEO, Richard Gray, reports. And the bulk of these homes go for less than R500,000.
Though terms and conditions apply per bank, it is well worth it for home buyers to be aware of these incentives when scouting for a new home.
But where do home buyers look?
“Opportunities for buyers present themselves in all sorts of places,” says Gray. “For example, agencies like Harcourts, which is on all big four commercial banks’ distressed sales’ panels, can introduce buyers to sellers who are selling their properties under the banks’ distressed sales programmes. These are normally realistically priced and the banks provide some incentives to buyers.”
Gray says buyers take advantage of these deals when the conclusive offer to purchase is submitted to the relevant [repossessing] bank, which has the first right of refusal, and will ascertain if the buyer qualifies for these benefits.
Both Harcourts and Pam Golding Properties currently have about 100 distressed sales on their books (excluding distressed properties already sold and awaiting transfer)
Pam Golding chief executive, Dr Andrew Golding, says, “These properties are situated in various regions, but more frequently in Gauteng, compared with KwaZulu-Natal and the Cape provinces. Prices range from R300,000 up to almost R3,5m, however the lower-priced brackets(less than R500,000) are most common.”
When it comes to selling distressed homes, PGP prefers to work on sole mandates to ensure that sellers get all the attention and guidance they require, says Golding.
“We use our regular channels to market and sell (including the high-exposure Pam Golding Properties website, PrivateProperty and Property24), but also have the convenience of accessing the marketing channels made available by the banks, for example MyRoof, which is very popular among buyers looking for value buys. Buyers can also make direct offers on properties listed on MyRoof, which will then allocate these offers to agencies to facilitate the transactions.”
How do consumers learn first about these potential bargain buys? PGP and Harcourts receive lists from all the banks containing open mandates and expired mandates, so it’s the agencies that will be able to assist consumers interested in buying distressed properties. Golding adds that buyers can also refer to the Bank Properties tab on PrivateProperty, or on MyRoof, which contains properties from all the banks, but also lists properties sold by private sellers.
Buyers can also set an alert for properties that come on the market for bank assisted sales, says Golding. For instance, this is the FNB page on which you can then set an alert. The same applies for the other banks.
Harcourts advertises all of its distressed sales here and has links to FNB’s assisted programme from that page.
The link to the distressed sales page on Pam Golding Properties’ site is here.