How to Buy Foreclosed Properties in the Philippines

GUIDES

|June 14, 2022

Building a house or buying a new one comes with huge costs. If you’re tight on the budget but already want to own a home, one option to consider is to buy a foreclosed property in the Philippines.

Property location, construction specifications, inflation, and the high cost of materials are some of the factors that contribute to the expensive cost of a newly-built home. Fortunately, foreclosed properties offer a more affordable alternative for home buyers and investors to buy a property. If you are yet to explore this option, this article provides comprehensive information to keep you guided.

What are Foreclosed Properties?

A foreclosed property is a type of asset that has been repossessed by the lender or the local government after the owner failed to keep up with the required payments or if its real property tax has not been paid to the local government.

Considered as non-performing assets, banks and lending institutions that own foreclosed properties actively market them. They provide discounts to potential homebuyers and investors and sell these properties lower than their actual market value. Read on to learn more about the benefits of buying one.

Advantages of Buying Foreclosed Properties

Low Cost

Foreclosed properties are marketed lower than their actual market value as they are considered distressed assets. Mainly, owners are more particular about getting rid of these properties and turning them into money as quickly as possible.

Legitimate Transaction

Banks or government units are the owners of foreclosed properties and this is another advantage for prospective buyers or investors. Because of such ownership, the legitimacy of the transaction can be assured. Although you would release a huge amount to them, you can be certain that the transaction is clean, there are no problems with the documents, and you’ll have nothing to worry about.

NOTE*: Foreclosed properties that are under a bank have updated taxes and utilities as the bank pays for its real estate taxes, monthly dues, and other expenses.*

Fast Title Transfer

If there are no pending court cases, the property titles of foreclosed properties are immediately transferred to the lender. Upon the acquisition of foreclosed properties, the ownership, as well as inherent liabilities, is also transferred.

High Profitability

For investors, acquiring foreclosed properties in the Philippines is a good investment. Its acquisition price is lower than the actual market value so you can sell it at a higher price. Some properties may only require minor repairs, upgrades, and renovation to further increase their market value which will also impact their profitability when sold in the market.

While there are great benefits when you buy foreclosed properties in the Philippines, there are also some disadvantages that you need to be careful of.

Issues You Need to Watch Out For When Buying Foreclosed Properties

Possible Damages

When you buy a foreclosed property, you should accept that it is a pre-owned property. There could already be problems with the unit. Consider damages as normal. Since they are sold on an “as is, where is” basis, you have no choice but to accept it as is, including its flaws.

Existing Liabilities

Aside from damages to the unit, another problem that may be encountered with foreclosed properties are illegal occupants. Some foreclosed properties may come with existing conflicts such as informal settlers or an occupant who has a strong refusal to vacate the property.

TIP*: To ensure that you’ll make the most of your money’s worth when you buy foreclosed properties in the Philippines, you may need to have the asset checked by a professional who can assess its actual value and give you an estimate of the cost of bringing it back to its good condition.*

3 Key Considerations in Buying Foreclosed Properties in the Philippines

• Location: When buying any real estate property, location is a key consideration.  Location may give you an idea about safety, the potential for flooding, and accessibility to transportation, basic services, major thoroughfares, and commercial developments.

• Other Expenses: The actual selling price of a foreclosed property is just a part of the financial obligations that you must commit to. The TRAIN law has brought restructuring on taxes. Prepare for other expenses such as real property taxes, transfer tax and fees, documentary stamps, and association dues if the property is in a private subdivision or development.

• Actual Condition of the Property: As mentioned earlier, the “as is, where is” condition of foreclosed properties may bring potential problems. It is essential to conduct a thorough inspection to assess the actual condition of the property and beware of structural flaws and other damages that may require huge expenses for repairs.

How to Buy Foreclosed Properties

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