Foreclosure homes are always popular among those who are looking for an ‘easy’ buy. But foreclosed homes can be downright scammy! And here’s why – normally, because these houses have been ‘out there’ for far too long, the banks that have repossessed them sell them very cheaply.
And who would say no to a cheap home anyway? Who wouldn’t want the best value for their Ringgit (or to our Singaporean clients – Singapore dollars)?
However, there is a catch. Just like most anything in business, if it’s too good to be true, it can never be true. There will always be pitfalls to buying foreclosed or bank-owned homes. That’s what ol’ Ben is gonna tell ya 🙂
Before making a purchase, it is especially important for prospective home buyers to get a good look at what lies ahead of them – the good, the bad, and sometimes in these cases – THE UGLY.
One of the biggest, most predominant issues with foreclosed homes lies on the general upkeep. These homes are ill-maintained for so many reasons and oftentimes, the money that buyers save on the price of the house all go to restoration. You see, not all foreclosed homes come in tip top shape like, say, a brand new One Surin unit! 🙂
Not a few of these houses require tens of thousands of dollars in cash to get it into tiptop shape – and the banks do not have the time and the energy to do it.
But how did these homes ended up so badly?
One common reason is vandalism. Former owners, with building anger and frustration over the foreclosure, tend to make the most damage to the house. They have nothing to lose on the property anymore anyway.
Another reason is the lack of financial capacity of the previous owner. The fact that they could hardly keep up with the mortgage bills makes it seem logical as to why they were unable to make money to keep the house in its best condition.
Aside from that, most of these foreclosed houses have been abandoned for so long. Left out usually unsecured and vulnerable to vandalism, intrusion, and maybe even criminal activities, these foreclosed houses get the worst of wear and tear.
Apart from the fact that these houses lack the standard maintenance and are almost literally aching for badly needed repairs, these houses are not necessarily easy off the hook – financially.
Because of the history of the foreclosed homes, money-wise, the houses have a longer story to tell. So sometimes it’s better to spend a little extra, say on a condominium unit at Kiaramas Cendana, than spend so little at first then spend a fortune on rehabilitation of the property later on (for example, on a property like Suria Residence). And the prospective buyer/s will have to be in the midst of that just the same. For one, banks are more difficult to deal with if the odds are on their side, in comparison with regular homeowners. They are looking to make the most out of this investment and they are not necessarily in need of the money. Because of that, they may not really share in your sense of urgency; or at least not on the same level. This problem is very common among non-cash buyers and is the exact same reason why foreclosed homes and properties are more popular and more easily sold to real property investors over regular homeowners.
These aforementioned pitfalls are just some of a number of clear disadvantages of getting foreclosed properties. But then again, most every type of real estate transaction or any other business deal for the matter comes with risks and pitfalls. It is our job, as partakers of business dealings, to find the right reasons to invest in something that is worth taking all the risks for.
If you’re still interested in foreclosed properties in Malaysia, speak to Johnson Park, our specialist at the agency (call him directly at +6012-3689910) and he shall be able to give you a couple of pointers.