Receivers Gains In Buying Property Below Market Value
Category Advice
If you are an operator in the property market of South Africa, you’ll know the demand for distressed property, or homes that are about to become bank repossessed property. A point in consideration is why should anyone be interested in selling their property below the market value? That’s because the nature of the property is liquid, without a guaranteed buyer, even if the price happens to be low. A property does not even have a guaranteed willing seller, irrespective of the amount of how much the buyer wants to offer.
In this context, you might consider buying property below its market price, if ideal rates are available. The advantages are many, such as cost, income potential and others. If you are an investor or are looking for a home to move in, you can consider foreclosure properties for sale, or homes that are about to become bank repossessed properties. Foreclosures are not, as is popularly assumed, run down properties. The term merely implies a property that needs renovation and work on it. Even brand new homes can be put up for sale by foreclosing.
A property below market value might require minimal, low cost renovations, whereas others might be just perfect to move into. Purchase of foreclosures, or repossessed property, allows you the advantage of income potential. Generally, homes are sold at a price that is way beyond their market value. The price might be substantially low, allowing you to make fixations at reduced rates. If the cost of the renovations is less, you get to make more profit out of your acquisition. It also helps in the long run if you are flipping homes.
While it is difficult to assume the exact market value of a property, per se, you can get an overview, deciding from the offers that are being made. Purchasing properties at distressed rates offers amazing bargains. That’s because, you get to build on the project by making renovations, with a low monthly mortgage payment, pay off the property faster than if it were bought at market value, and finally have a highly valued asset for the future.
ROLE OF THE RECEIVER
Certain banks decide to purchase a non-judicial foreclosure according to the details of the original loan documents. It helps the bank become the only title holder of the distressed property, even in terms of the liabilities and burdens. To free the bank of legal obligations, maintenance issues and leasing, receivers may be appointed. A receiver helps manage the distressed property and associated operational and tax related aspects as a third neutral party.
Appointment of a receiver helps them sell the distressed property as it is and maximize its value with the help of improvement or appreciation. It also prevents the borrower from reducing the value of the property any further, on account of deferred maintenance. The primary focus of the receiver is to limit the liability of the bank, as well as provide the regular operational activities for generating income out of the below market value property.
The receiver also offers advice on construction without interfering with any developments that may be going on in the property. The bank can save their time and money by approaching the court to appoint a receiver.
Author: IMAGINE Properties