Quick Guide to Acquired Assets
What Are Acquired Assets?
In the Philippines, acquired assets usually refer to real estate properties and vehicles that have been foreclosed or repossessed by lending institutions because delinquent borrowers defaulted on their debt obligations or were unable to pay off their housing or auto loans. These acquired assets are typically resold by the creditors to recover the money that they lost from the unpaid loans. Acquired assets can also consist of other tangible properties such as jewelry, equipment, machinery, artwork, and any other such assets that have been recovered by lenders to be resold.
These lending institutions also come in a variety of forms. Borrowers typically take out housing and auto loans from financial institutions like banks, but they can also get the money from car dealerships, housing developers, the Social Security System (SSS), the Government Service Insurance System (GSIS), as well as from the Housing Development Mutual Fund, more commonly known as the Pag-IBIG Fund.
In many cases, the lender affords delinquent borrowers or those in default of their loan contracts a chance to pay off the loan amount—and any additional fees besides—before the property is put up for auction or for sale. In some cases, the borrowers may even be able to redeem or buy back a property that may have already been sold. Typically, this chance is afforded to debtors because of their right of redemption granted by Philippine law. However, it isn’t unheard of for such options to fail, thus leaving the lending institutions with the sole option to sell the properties in question.
Why Is Buying Acquired Assets Good For The Economy?
Whether the original owners have abandoned their property, refused to turn it over to the lender, or voluntarily surrendered it as mandated by law, most foreclosed properties are eventually successfully repossessed by the lenders who have legal jurisdiction over these assets. After all, they serve as collateral for the loans when they are first taken out by the borrowers. /p>
Repossessions tend to be costly for the original owners because lenders do not only seize the property but the borrowers can also face additional penalties and deficiency charges. Additionally, repossessions tend to negatively impact the borrower’s creditworthiness in the eyes of lending institutions, which means they’ll have a harder time borrowing money for big-ticket purchases in the future.
Nevertheless, foreclosures and repossessions aren’t all that bad when the bigger economic picture is considered. The process of putting acquired assets back on the market through auctions and sales affords other buyers the chance to buy properties at a discount. Conversely, it also helps lenders avoid being in the red because they are able to recoup their losses by selling “used” properties that would otherwise be useless to them.
Why Do Houses And Vehicles Get Repossessed And Become Acquired Assets?
But why do property owners end up not being able to pay the money they borrowed in the first place? Why do they default on their loan payments? The short answer is simply because they can no longer afford to pay their loans, or they are unable to continue making the payments. The long answer is that properties go into foreclosure for a variety of reasons. These are the most common ones:
- Inability to pay the increased rate of interest for an adjustable-rate loan.
- Mounting expenses for the upkeep of the property.
- Relocation to another country, e.g. as an OFW or as a permanent migrant.
Whatever the reason, the real estate, vehicle, or other tangible asset in question will be repossessed to be resold to other individuals, who then may be able to put the property to good use.
What Acquired Assets Are Available For Purchase In The Philippines?
As previously mentioned, there are a variety of acquired assets that can be made available to buyers by lending institutions. These include the following:
Foreclosed real estate properties are considered non-performing assets and cost banks or other lending institutions a lot of money, which is why they are usually sold at prices below their actual market values. At Robinsons Bank, for example, different types of foreclosed real estate properties are offered to buyers on a regular basis. These include vacant lots, houses and lots, and condominiums, among others.
Similar to real estate properties, automobiles like sedans, hatchbacks, station wagons, minivans, and SUVs tend to be expensive. As such, buyers take out loans to be able to make staggered payments on the vehicles they plan to purchase. However, as you already know, an automobile gets repossessed when its original owner is unable to pay off this loan to the lending institution.
Many buyers prefer buying repossessed automobiles from financial institutions like Robinsons Bank simply because they see this as a safer option compared to getting a car from an unknown seller. After all, established and reputable institutions like banks can make sure that the sale is completely legal and that all relevant documents (official receipt, certificate of registration, deed of absolute sale, and so on) are turned over or provided to the new owner.
Although motorcycles are usually less costly compared to automobiles, many of these vehicles get repossessed for the same reasons. However, since many other buyers can afford to purchase motorcycles, and considering their easy maintenance, fuel efficiency, and functionality, this class of vehicles has emerged to become one of the most popular among those who are looking to buy repossessed properties. As with automobiles, buyers usually prefer to explore the repossessed motorcycles available from reputable institutions like banks.
Other Tangible Assets
Other tangible assets such as jewelry, gemstones, gold bullion, machinery, equipment and artwork can also be repossessed and resold as acquired properties. Typically, such objects are provided by borrowers as collateral or security for the loans that they take out from lenders. If the borrower defaults, the lender can simply take over these assets to be able to recoup some—or the entirety—of their losses.
What Are The Advantages Of Buying Acquired Assets In The Philippines?
People have different reasons when it comes to buying repossessed or foreclosed properties. A buyer may want to purchase a house and lot that is being auctioned off simply because they want a home that they can call their own. Another individual may be buying a similar kind of property because they plan to refurbish it, rent it out, and earn a passive income from it.
Whatever your reason may be, everyone who’s in the market for foreclosed and repossessed properties will be able to take advantage of the same benefits. Here are some of them.
The Prices of Acquired Assets Are Typically Lower Than Their Market Value
Foreclosed and repossessed properties are attractive options for buyers who are looking for great bargains because they are usually sold at much lower prices than their actual market values.
Foreclosed real estate properties are typically considered “distressed properties” that lenders are normally willing to sell cheaply to protect their investment, while repossessed automobiles and motorcycles are technically second-hand vehicles whose values continue to depreciate even further over time. When such properties are idle, they aren’t only not making any money for the lenders, they are also virtual money pits that cost a lot of money to maintain. As such, you can expect lenders to be very keen on offloading these properties, which means they’ll be selling them at discounted prices of anywhere between 10% and 40%.
It’s Easy to Find Reputable Trustworthy Sellers of Acquired Assets
Unlike buying from unknown individual sellers, buying an acquired asset from a bank or another reputable institution ensures that you’ll be able to make a secured and legal transaction. Not only will you have access to wide spectrum of real estate properties or vehicles for sale and for auction, you can also be certain that you won’t be defrauded when you’ve finally made your choice and are ready to hand over the cash.
There Are Plenty of Earning Opportunities from Buying Acquired Assets
There are great earning opportunities if you choose to invest in acquired assets. In the case of real estate properties, you can buy residential units, refurnish them where necessary and turn them into houses or condominium units for rent. Whatever you earn from renting out the property can then be used to cover expenses like your mortgage payments, insurance payments, and all associated taxes.
You can also consider going into the ‘buy and sell’ of real estate properties—a strategy that you can approach in two different ways. The first of these is known as “flipping,” which involves buying properties and then selling them as quickly as possible with only minor refurbishments or none at all. The second is purchasing real estate properties at a discount, rehabilitating them extensively, and then selling them at significantly higher prices than those for which they were originally acquired. Whichever the case, buying and selling foreclosed and repossessed real estate has the potential to be a lucrative venture if it’s done correctly.
In the case of buying repossessed automobiles and motorcycles, the benefits range from having your own vehicle for personal transportation to owning vehicles that you can use for your business. Motorcycles, for instance, can be used for deliveries and for ferrying small items between your business locations, while a relatively new repossessed car can be registered with a transport network vehicle service for conducting ridesharing services.
Where Can I See Listings Of Acquired Assets In The Philippines?
Looking for acquired assets to purchase in the Philippines is quite easy and straightforward. A simple search online, for instance, will lead you to the webpages maintained by banks and other lending institutions in which they regularly publish a list of their acquired properties.
In Robinsons Bank’s official website, for example, you’ll be able to find a schedule of real estate properties that details the property type, location, lot and floor areas, reduced selling price, and mode of sale for each of the properties being sold. There is also a list of repossessed automobiles that details the vehicles’ make and model, year of release, mileage, color, plate number, transmission and fuel type, place of registration, selling price, and mode of sale. Meanwhile, for motorcycles, only the make and model, engine number, chassis number, and repo price are provided, but these will already give you a good idea about what you can expect with each of the assets listed.
Other lending institutions like Pag-IBIG, SSS, GSIS, and even developers and car dealerships will also have their own listings of repossessed and foreclosed properties. And if you’re hoping instead to browse through lists of acquired assets from many different lending institutions or agencies all at once, there are also online portals that collect and aggregate information from numerous sources.
Tips To Consider When Buying Acquired Assets In The Philippines
Tips To Consider When Buying Acquired Assets In The Philippines
Immerse Yourself in Property Auctions
It’s always a good idea to familiarize yourself with the biding and sale process by actually attending a few auctions yourself before getting in on the action. Observe how other bidders conduct themselves, what they look for in properties, what questions they ask, and how they go about the process of bidding and buying.
Attending auctions also gives you the chance to speak with accredited brokers or agents, who will be able to walk you through the process and discuss your best options depending on your needs. Working with accredited brokers or agents also affords you peace of mind in knowing that you have someone you can trust when it comes to providing assistance in dealing with all required transactions.
Inspect the Property and Ask the Right Questions
In many cases, banks and other institutions will sell you the property on an “as-is, where is” basis. Essentially, what this means is that you consent to their disclaiming liability for the property being sold and that you are accepting the property in its original condition. As such, it is very important to inspect the condition of the property you are eyeing, whether it is real estate, an automobile, a motorcycle, or something else.
When it comes to real estate, make sure to consider the location thoroughly. Is the neighborhood safe? Does it have access to basic services? Is it vulnerable to disasters like flooding and earthquake? And if you’re buying a house or a condominium unit, is the structure in good enough condition? All of these will have an impact on the viability of the location as a place where you can take residence or build a rental property.
On the other hand, if you’re planning to purchase a repossessed vehicle, make sure to check the vehicle not only for cosmetic damage, but also for signs of major collisions or exposure to flooding. Also set aside time to test drive the car or motorcycle just to make sure that all of its components are working perfectly and that it is up to snuff when it comes to performance. Better yet, bring a mechanic with you who can help you inspect the vehicle you are eyeing.
Consider All Possible Additional Expenses
What’s great about performing an inspection of the property you are considering is that you’ll also be able to anticipate some of the additional costs that may come with the purchase. Remember, a property’s selling price may be quite affordable, but what about the costs that you will have to shoulder if it needs major repairs?
On top of the repair costs, you also have to consider other possible expenses like continuing maintenance costs, real property taxes, neighborhood association dues, and fees for the processing or transfer of title, if you are buying real estate.
Conversely, if you are buying a vehicle, you’ll have to go to the Land Transportation Office (LTO) and the Philippine Registrar of Deeds to put the vehicle title under your own name. Typically, the bank or lender will already provide you the vehicle’s official receipt, certificate of registration, and deed of absolute sale (which you just need to sign and get notarized), but do make sure to ask the particulars.
Explore Your Financing Options Early On
The most desirable acquired assets elicit intense bidding wars, which is why you shouldn’t attempt to enter the fray if you are not prepared to make equally attractive offers. Aside from having enough downpayment money that you can drop on the spot, it also helps if you have already been prequalified for a loan before you start getting too earnest in your search for a foreclosed or repossessed property to buy.
It’s often not too challenging to deal with money matters if you are planning to purchase an acquired asset from a reputable lender. Aside from the fact that the selling price of acquired assets are already favorable to begin with, you also have access to a plethora of financing options that are more or less designed to meet your financial requirements. This is why if you don’t have enough liquid cash to buy your prospective property with, you should consider getting pre-approved for a loan right away. Doing so will also give you greater negotiating power compared to other buyers.