Foreclosed House and Lot

Foreclosure takes place when the buyer or title owner of a property fails to keep up with the periodic payments for the bank loan that they used to purchase the said property. It can also happen when the property owner fails to pay the real property tax they owe to the government in a timely manner Real properties likes houses, lots and condominiums, and vehicles can all become foreclosed properties.

After filing a notice of default, a public notice that a borrower has not made their payments according to their agreement, the lender begins the process of reclaiming the ownership of the property in question.

It doesn’t work to the advantage of the lender to keep the non-performing property for a long time. If they’re not disposed as early as possible, these properties will pile up and their their balances can become too high for the lender. The property will then end up in the lender’s list of acquired properties and be sold quickly at market value or below it to pay for the defaulted loan. These instances make foreclosed house and lots an advantageto Filipinos who want to purchase their own home at a more affordable price.

There are two (2) main avenues for purchasing foreclosed house and lots in the Philippines. The first is through lenders like private banks. These lenders list foreclosed house and lots on their website, and interested buyers can get in touch with them to negotiate the price of the property. The second is through government agencies or banks like Home Development Mutual Fund (HDMF or Pag-IBIG Fund), SSS, Bangko Sentral ng Pilipinas (BSP), or Land Bank, which hold auctions for foreclosed properties.

The process for acquiring a foreclosed house and lot vary depending on the bank or agency you are planning to buy from.

Lenders typically post an updated list of foreclosed house and lots on their website. This list often includes the following information: the general location of the property, its exact address, lot area, floor area, and the suggested price of the house and lot. Foreclosed properties are sold on an “as is where is” basis, which means that these house and lots are sold on whatever condition they currently are and that the buyer accepts the property with all its faults. As such, it’s up to the buyer to ensure that they are getting their money’s worth.

Aside from the property details, these pages often include the contact details of the lender. Prospective buyers of foreclosed house and lots should personally get in touch with the lender to find out the documents they need to submit, the entire bidding process, and the payment terms available to them.

More and more Filipinos are discovering the benefits of buying foreclosed house and lots. This is because acquiring repossessed properties allows them to enjoy the following:

• Enjoy reduced property cost.From a mortgage lender’s perspective, a foreclosed house and lot is a non-performing asset. They incur costs such as legal fees, utility bills, real property tax, and even added security to prevent illegal settlers from inhabiting the property. The cost of the upkeep grows the longer the property stays with the lender. As such, lenders are more willing to lower the price of the property to convert it to cash as soon as possible. Banks and government agencies want to get back 100% of what the property cost them; however, they can also reduce a good portion of the price to attract more buyers. Some lenders offer foreclosed house and lots with a sizeable discount, a low fixed interest rate, or longer payment terms.
• Sell the property at a much higher price. Acquiring a foreclosed house and lot is also a surefire investment. If you’re into property investing, you can acquire a foreclosed house and lot that is sold at or below market value, renovate it, and then sell it at a much higher price. This practice ensures a high return of investment. If you’re looking to buy a home, you can simply renovate or repair sections of the house that need fixing. This improves the property’s market value and translates to greater equity.
• Deal with a reputable seller. Working with a bank or government agency dramatically decreases your chances of working with a problematic property. These lenders make the paperwork easy by transferring the titles of foreclosed properties to their name. If the property’s title has been consolidated under the lender’s name, buyers can expect that all the legal documents pertaining to the ownership of the house and lot is taken care of. At the same time, lenders also assume ownership of these properties, meaning they take care of all expenses related to the upkeep of the property, including real estate taxes and monthly dues.

Buying a foreclosed property also comes with its own set of risks and responsibilities. It’s important to be aware of them so you know exactly what you are getting yourself into before you start the process of acquiring a house and lot from a bank or government agency. These include:

• Lack of options in terms of location. Buyers don’t exactly have a lot of options in terms of the property’s location. Before buying a house and lot, they should look into the security around the area, how vulnerable the location is to natural disasters and calamities, and its proximity to facilities that provide basic services, like schools, hospitals, and major thoroughfares. Buyers should scrutinize the property’s location and decide if they’re willing to live in the area given its current milieu.
• Uncertainty when it comes to the condition of the property. Foreclosed house and lots are sold in “as is where is” basis, meaning the seller or lender is not obligated to make further repairs on the home before they put it on auction or sell it to interested buyers. As such, prospective buyers should inspect the home, check for structural defects and sections that need repairs, and carefully consider if it’s worth its current price plus the cost of necessary repairs and future improvements. Take note that while some foreclosed house and lots certainly need repairs, there are also properties that are brand new and hardly have signs of wear and tear. In the case of the latter, interested buyers can certainly get their money’s worth.
• Additional costs that the buyer needs to shoulder. On top of the price of the property and the repairs that come with it, buyers also need to shoulder other expenses. These include real property taxes, taxes and fees associated with transferring the land title, and association dues in private communities. In addition, some properties can still be embroiled in a legal case or may have illegal settlers. Be sure you’re ready to take this on immediately after acquiring the property, as these can add a hefty chunk to your expenses.

Many Filipinos dream of owning their own home, and acquiring a foreclosed house and lot is a smart and cost-effective way of doing just that. Below, we enumerate the signs that you’re ready to purchase a foreclosed house and lot.

• You want a place that you can call your own. You’re tired of renting, you want to live on your own, or you want to have a permanent residence where you can start a family. These are very real and pressing reasons for wanting to own an affordable house and lot that you can fix and renovate to fit your needs and lifestyle.
• You’re willing to do much of the legwork. Buyers should always do due diligence when purchasing a foreclosed property. If you’re willing and able to personally check the house and lot you want to buy, participate in auctions, and stay on top of the paperwork you need to submit or accomplish, then acquiring a foreclosed house and lot may just be for you. This willingness to go the extra mile can also serve you well when you’re repairing your newly acquired home.
• You want a secure investment. You have your eyes set on a foreclosed property, which is available at market value or lower, and you want to sell it at a higher amount in the future. Many property investors are into ‘flipping’ acquired house and lots and selling them, rinse and repeat. This is a great way to get high return of investment.
• You have cash on hand. The best foreclosed properties in the market can start bidding wars. If you’re keen on buying a particular house and lot, you need to present an attractive offer and be prepared to deal with the payment terms. At the same time, you also need to be ready to take on additional costs like taxes and fees. Having cash on hand or a pre-approved housing loan ensures that you’re ready to handle these opportunities and financial responsibilities.

How do you get the best value for your money on your initial foray into foreclosed house and lots? Below are time-tested tips you should remember when looking for or buying foreclosed properties.

• Know where to find foreclosed properties. The first thing you should know is where to look. Remember that you have limited options in terms of location, but you can improve your chances of finding a property in a location that you like by having access to a long list of foreclosed properties. To find out which properties are for sale or auction, check out bank websites, lending institutions, and government financial institutions like SSS, NHA, and Pag-IBIG Fund.
• Attend property auctions. Some properties don’t make it to the lenders’ website, and attending a property auction is a great way to learn about these properties. At the same time, property auctions offer you plenty of opportunities to talk to agents and sellers and discuss the details of the buying process.
• Check your financing options. There are several options available to you when buying an acquired house and lot in the Philippines. You can go with a mortgage, which gives you the advantage of immediately transferring the property’s title to your name, or a contract to sell, which provides more flexibility. If you have cash on hand or a pre-approved loan, you can also show the seller that you’re serious about making the purchase.
• Don’t shy away from asking questions. You can only infer so much about the property in question from the short description available on the lender’s website. Get in touch with the seller and ask directly about the buying process, property’s condition, documents requirements, and if there are other buyers interested in the property—a hint that you should offer a more strategic pricing.
• Personally visit the property. It’s imperative that you see the property personally before making the purchase. This way, you can inspect it, see sections that will need repairs or additional work, and observe its surroundings. This can help you make crucial decisions about the property and how you’re going to deal with all its flaws once it has been turned over to you.
• Be prepared to shoulder the cost of repairs. While there are foreclosed house and lots out there that are in brand-new condition, there’s always a chance that the property you are bidding for will require cleaning, repairs, and renovations before you can move in. If possible, hire a professional who can estimate the cost of repairs and renovations the property needs prior to adjusting your offer to the lender.

Robinsons Bank offers a wide selection of foreclosed house and lots in the Philippines. Check out our list of properties and organize the list according to property type, location, description, lot area, floor area, and selling price. Once a property catches your eye, get in touch with us so we can talk about the next steps into property acquisition.

For concerns or questions you may send us a message through our Customer Care page or call our C3 hotline at 637-CARE (2273), or domestic toll-free number, 1-800-10-637-CARE (2273).