Homework can lead to a bargain
Foreclosed homes often sell for less than the market price, but not all of them are a bargain.
At best, you could end up with a decent home at a discount, or one you can rent or resell for a tidy profit. At worst, you are saddled with a house that will cost more time and trouble than you bargained for.
So, how can you make a wise choice?
'It is possible to get a bargain, but it requires a lot of homework and you have to be meticulous,' said Ronald Cheung, director of Midland Realty's surveying department. 'You must have a good knowledge of the area you want to live in.'
Once you have picked a property and offered a price you think is reasonable, keep submitting your offer - even if it is rejected at first.
'Banks adjust the selling price from time to time, subject to their business strategy. If you are patient, you may get a bargain,' Mr Cheung said.
Realtors said those hunting for foreclosed properties should look around before making offers, because pricing strategies varied from bank to bank. For example, one bank is asking for $2.8 million for a 1,691 square foot village house in Tai Mong Tsai, Sai Kung, while another bank is asking for $3.8 million for the house next door.
Those looking to buy foreclosures generally have two courses of action open to them. The first is to find foreclosed homes through estate agents because lending banks appoint them to sell repossessed assets.
Prospective buyers can view the inside of the property, and prices are negotiable. Mr Cheung said the process was the same as in buying a second-hand flat.
Purchases can also be made at a foreclosure auction or tender. The setback here is that the bidder does not get to see the inside of the home before the purchase.
The winning bidder must buy the property 'as it is', even if a defect was found later, said Desmond Poon Chi-ming, associate director of Chartersince Surveyors.
Meanwhile, buyers of foreclosed property should be aware of the risks.
Daniel Wong Kwok-tung , a lawyer at Fan, Wong & Tso, advised prospective buyers to ensure that all the property titles were clean. Any outstanding liens on the property become the buyer's responsibility.
House owners burdened with debt were not likely to have spent much money on maintaining the property, experts said. So the new buyer may have to invest in redecorating the unit.