If you are looking for a great deal on property in Gauteng and Cape Town, you may want to consider bank repossessed houses. While the circumstances surrounding bank repossessed houses are often unfortunate, purchasing this type of property can save you a lot of money, and can be a great way to find your dream home!
“Bank Repossessed properties are the result of borrowers defaulting on their home loan repayments to the extent that the home loan has to be cancelled.” (www.iolproperty.co.za). There are 3 phases during the repossession process at which buyers can purchase these properties.
The first is Distressed Sale, the second is Sale in Execution (SiE), and the third is Properties in Possession (PiP).
Understanding the repossession process is important. There are various stages to this process:
1) The borrower (property owner) has to default on his/ her payments to the point that the only option is repossession
2) The attorneys representing the bank who has lent the money applies for a judgement at the magistrate’s court
3) If the debt that is owed has still not been recovered at this point, the movable assets (i.e. cars and furniture) are auctioned
4) If the money gained from the sale of the movable assets does not cover what is owed to the bank, then the property itself is auctioned (called a Sale in Execution). Up to this point, the seller may have tried to sell the property as well, which is known as a Distressed Sale
5) Should the bank’s reserve price not be met in the Sale in Execution, then the bank is entitled to buy back the property – known as a Sale in Possession.
If you are looking for repossessed houses in Gauteng and Cape Town, there are numerous options and organisations you could consider. In terms of auction houses themselves, Auction Alliance is an auction house specialising in property sales. Aucor is another key player on the South African property market playing field. The big South African banks all offer their own version of repossessed property auctions, usually linked to an auction house or a bond originator.
If you are looking for repossessed house auctions in South Africa, popular property websites are a good place to start. The Property24 website lists upcoming repossessed property auction dates, as do many of the other leading property websites. Iol.co.za also lists repossessed property auctions by the auction house, and allows you to search by your specific criteria. Myroof.co.za is linked to Standard Bank’s property repossession arm, and lists property auctions by price, type of property and price range.
Attending a repossessed property auction can be a real experience, and lots of fun. Some advice to the first timer though:
- Know your maximum limit up front, and do not be tempted to exceed this, no matter how excited you get during the auction procedures
- Make sure you keep your hand down if not bidding – there are numerous stories of people who have lifted their arm to swat a fly or scratch their nose, and have ended up the proud owners of a new property!
Buying houses repossessed by banks in Gauteng and Cape Town is a good option for the savvy buyer – just ensure you know how it all works, so you don’t get caught out!