Foreclosed Properties: Description, Pros and Cons, and Listings

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Buying foreclosed properties can be a great deal, but buying one isn’t without risk, so make sure that you know what you’re getting into.

Foreclosed properties are still flooding our country’s real estate market. For buyers who can handle risk, these are some great deals. However, if you’re planning to buy your first home, carefully consider whether buying a foreclosed property is a good idea.

In this article, we discuss everything you need to know about foreclosed properties, from its description, benefits and disadvantages, prices, and where you can buy them.

Foreclosed Properties Description

What is a foreclosure?

Foreclosures happen when a lender takes a property from an owner who has defaulted on their mortgage and has fallen behind on payments. In turn, lenders will try to recoup as much of their investment as possible by selling a foreclosed property for slightly less than it might be worth.

In the right situation, you can get a property below market value because banks and lending institutions who own these properties are motivated to get them sold.

Foreclosed Properties Benefits and Disadvantages

Buying foreclosed properties has its own pros and cons. Below, we take a closer look at some of its benefits and disadvantages.

  • Benefits

What are the benefits of buying foreclosed properties?

  • Low price. Foreclosed properties are considered ‘non-performing assets’; thus, banks and lending institutions who own these properties are actively marketing them the best way they can.

One of the ways they do so is through discounted sales to potential investors and homebuyers, which is the reason why foreclosed properties are sold below their actual market value.

  • Secure and legitimate purchasing process. Since you can acquire these properties from banks, lending institutions, or the government, the transaction is secure, clean, and legitimate. Also, banks have accountability and transparency regarding the legal documents and conditions of the property. 
  • Sell the property at a higher price. You can flip the property and sell it at a higher price. ‘Flipping houses’ involves buying a property, renovating it, and selling it for a profit.

So, whether you’re a home buyer or property investor, you can buy foreclosed properties, transform them through repairs, renovations, and upgrades, and sell it in the market at a higher price.

  • Disadvantages

On the other hand, buying foreclosed properties has its disadvantages as well.

  • You own the property ‘as-is’. Foreclosed properties are usually sold on an ‘as-is’ basis. This means that you’re buying the property as it comes – including whatever issues it has. For instance, some foreclosed properties are heavily damaged and some even come with illegal occupants on its vacant lot.
  • You may need a large amount of cash upfront. Repair costs aside, you may also need a large amount of cash upfront – especially if you’re buying the foreclosed property at auction. In many cases, cash bids are required at these events.

However, if you’re not bidding on a foreclosed property at an auction and have good credit, you may still be able to finance it.

  • The property may need several repairs. Foreclosed properties usually require serious work, either due to the previous owner’s failure to maintain the property, long periods of vacancy, or due to damage caused by the last occupant.

The property may have been left in disrepair, and the seller may have taken not only the appliances, but basic fixtures for some of the systems. If you buy a foreclosed property, you’ll be responsible for any repairs, renovations, or upgrades it needs. 

Tips When Buying Foreclosed Properties

If you’re planning to buy a foreclosed property, here are some tips to consider:

  • Know where to look.

To find foreclosed properties, go to banks, lending institutions, and government financial institutions like the National Housing Authority (NHA), Home Development Mutual Fund (Pag-IBIG Fund), and the Social Security System (SSS).

Also, banks and financial institutions also have a roster of accredited brokerages and brokers that help them market and sell their foreclosed assets – make sure to check out their websites to help you find the best property deals.

  • Find a real estate agent specializing in foreclosures.

If possible, hire a real estate agent who is knowledgeable about the foreclosure process to represent your interests. One strategy for finding the right real estate agent is to visit websites with a database of foreclosed homes in your desired area.

Of course, you can work directly with the bank instead of hiring a real estate agent to save on the commission split. However, this can be a risk and in fact, most buyers feel secure when they are represented by an experienced agent.

If you find a real estate agent you want to work with to buy a foreclosed property, ask them to look out for foreclosure properties that meet your criteria.

  • Attend property auctions.

Property auctions, usually organized by real estate brokerages and/or banks, are an excellent way to discover foreclosed properties not usually listed on property websites. Also, attending property auctions enables you to talk to an agent face-to-face to thoroughly discuss your purchase, seek their professional advice, and practically walk you through the buying process.

  • Inspect the property.

Foreclosed properties are almost always sold ‘as-is, where-is’, so don’t hesitate to schedule an inspection. Remember, these properties have been owned previously, so don’t expect that it will be in pristine shape, though most on offer during property auctions may only require minor repairs.

Expert house flippers and real estate investors recommend investing on a foreclosed property that can be fixed within 30 days or less. This way, you can lease, sell, or move into the property in a short time and avoid incurring additional holding costs.

  • Have some extra cash to spare.

The best foreclosed properties can ignite bidding wars, particularly during property auctions. To have a good chance at buying the property you want, you must be ready to make an attractive offer and deal with the payment terms. Normally, buyers with down payment money ready on the spot win these bidding wars, and may even be offered a big discount by the seller.

Bonus tip: Be careful and make sure you’re not paying more than you should! Find out the market value of similar properties in the vicinity of the property you are bidding for.

Foreclosed Properties Features and Listings

Below are some foreclosed properties listing along with their respective features.

  • BFS Foreclosed Single Attached at L-28, MT. VIEW RESORT SUBD., Bo. Cabcaben, Mariveles, Bataan (Lot Area: 54.00 sqm; Floor Area: 30.00 sqm) For Negotiated Sale

Property details:

  • Property Source: Bahay Financial Services or BFS (For inquiries, please contact BFS directly!):
    • Telephone number: 7750-3888
    • Property ID (Account Number): AN-1285405
    • Address: Lot L-28, MT. VIEW RESORT SUBD., Barangay Bo. Cabcaben, Mariveles Bataan
    • Lot Area (sqm): 54.00
    • Floor Area (sqm): 30.00
    • Offer Price (PHP): 135,000.00
    • Foreclosure Stage: Under Foreclosure
    • Occupancy: Abandoned
  • BFS Foreclosed Single Attached at B-52, L-4, YOUNGSVILLE SUBD., Bo. Igpit, Opol, Misamis Oriental (Lot Area: 90.00 sqm; Floor Area: 1.00 sqm) For Negotiated Sale

Property details:

  • Property Source: Bahay Financial Services or BFS (For inquiries, please contact BFS directly!):
    • Telephone number: 7750-3888
    • Property ID (Account Number): AN-2735549
    • Address: Block B-52, Lot L-4, Phase PH-1, YOUNGSVILLE SUBD., Barangay Bo. Igpit, Opol City,Misamis Oriental
    • Lot Area (sqm): 90.00
    • Floor Area (sqm): 1.00
    • Offer Price (PHP): 180,000.00
    • Foreclosure Stage: Under Foreclosure
    • Occupancy: Abandoned
  • BFS Foreclosed Row House at B-50, L-30, Alley 1, CARISSA HOMES NORTH, Bo. Santo Cristo, San Jose Del Monte City, Bulacan (Lot Area: 35.00 sqm; Floor Area: 35.00 sqm) For Negotiated Sale (Occupied)

Property details:

  • Property Source: Bahay Financial Services or BFS (For inquiries, please contact BFS directly!):
    • Telephone number: 7750-3888
    • Property ID (Account Number): AN-1722205
    • Address: Block B-50, Lot L-30, Alley 1 Street, Phase PH-II-A, CARISSA HOMES NORTH Subdivision, Barangay Bo. Santo Cristo, San Jose Del Monte City, Bulacan
    • Lot Area (sqm): 35.00
    • Floor Area (sqm): 35.00
    • Offer Price (PHP): 222,000.00
    • Foreclosure Stage: Title Consolidated
    • Occupancy: Occupied
  • BFS Foreclosed Single Detached at B-16, L-11, NHA-LOURDESVILLE HOMES, Brgy. Balulang, Cagayan De Oro City, Misamis Oriental (Lot Area: 136.00 sqm; Floor Area: 31.89 sqm) For Negotiated Sale (Occupied)

Property details:

  • Property Source: Bahay Financial Services or BFS (For inquiries, please contact BFS directly!):
    • Telephone number: 7750-3888
    • Property ID (Account Number): AN-2170984
    • Address: Block B-16, Lot L-11, NHA-LOURDESVILLE HOMES Subdivision, Brgy. Balulang, Cagayan De Oro City, Misamis Oriental
    • Lot Area (sqm): 136.00
    • Floor Area (sqm): 31.89
    • Offer Price (PHP): 249,000.00
    • Foreclosure Stage: Title Consolidated
    • Occupancy: Occupied

Where to Buy Foreclosed Properties

To find foreclosed properties, go to banks, lending institutions, and government financial institutions like the National Housing Authority (NHA), Home Development Mutual Fund (Pag-IBIG Fund), and the Social Security System (SSS). You can also buy foreclosed properties at auctions (usually organized by real estate brokerages and/or banks), as well as online.

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