In the Philippines, having a house and car are a testament to how much you have achieved. You’re successful at what you do, and your family is set for life. That’s why these are usually the first major purchases for most Filipinos as soon as their income allows for it. However, the ever-rising inflation added an excise tax on automobiles, and rising property prices have made the dream of owning these assets unreachable for the average Filipino. Fortunately, there are always bargains to be had in buying cars and real estate.
For instance, why not consider repossessed assets from banks? Repossessed assets or acquired assets are properties or possessions that were voluntarily or forcefully surrendered by buyers to the lending institutions—usually banks—because of their inability to pay the mortgage or loan.
It’s always a sad thing for the homeowner or car owner to have their assets seized by their creditors, but it also presents an opportunity for other buyers and investors to buy the assets at a discount. As they say, one’s loss is another’s gain; this is simply the reality of getting a mortgage or car loan.
So, are repossessed or acquired assets worth purchasing? What are the advantages of buying such assets? Read on and find out.
Below Market Value
More often than not, the bank-acquired properties and cars for sale come with prices that are below market value. That doesn’t mean though that you should trust the bank explicitly and buy blindly. There’s a reason why they are advertised as “as is where is” after all.
When considering a property, for example, you have to inspect the property beforehand, preferably with a contractor or someone knowledgeable about repairs. The same is true for buying repossessed cars. Look under the hood, and bring a trusted mechanic to see if there are repairs needed. Finally, factor the cost of repairs and renovations when coming up with your bid or offer to get a fair price.
Open to Negotiation
Foreclosed properties and cars are considered to be non-performing assets for the banks because of the cost of maintenance, tax, and insurance for a property, as well as the depreciation cost, especially when it comes to vehicles. That’s why banks and lending institutions are motivated to sell these assets to recoup the costs while ensuring a tidy profit from the transaction. With this eagerness to sell and get rid of these money pits, banks may be open to negotiating the price, especially if you did your homework and discovered potential issues with the property or car.
Clean Title or Registration
In general, banks ensure they dot the i’s and cross the t’s when it comes to processing the paperwork such as land titles and vehicle ownership documents. This way, potential buyers can have peace of mind when purchasing these assets. Conversely, buying properties and cars directly from owners sometimes end up as a scam scenario or a nightmare situation laden with too many legalities and bureaucracy that you have to unravel.
Aside from personal use, purchasing foreclosed assets also affords a great opportunity for investors to earn income. In the Philippines, investors look for bank-acquired properties with great locations at a low price to convert as rental properties or to renovate and resell for a price that’s within market value. Many have made their fortunes this way with the high inventory of foreclosed properties available from banks, as well as other lending institutions. Meanwhile, used car dealerships get their supply of used cars from banks as well. These companies bid low as they need to repair the vehicles before displaying them on their showroom floors for clients to view and test-drive.
Whether you are purchasing acquired assets for personal use or as an investment, there are definite benefits to be had. That said, it’s also worth your while to do some thorough research before placing your bid or making an offer. And it goes without saying that you should trust only authorized and certified professionals employed or accredited by banks to prevent being scammed or being burdened by unnecessary fees.