Every year, millions of home sales and purchases are made all over the world.
In our case, in Spain, although the situation seems to have suffered a recession, at least in the local market, due to the increase in prices and mortgages and the lack of knowledge about what is going to happen throughout the year, the truth is that many operations continue to be closed, partly thanks to the investment that many foreigners make in the real estate sector, both as a second home – even first – or because the prices are more affordable for foreigners, which allows them to invest to obtain profitability.
As many of you surely know, the purchase of a property can be done in many ways, from a private contract between the parties, such as through a real estate agency, for example.
In addition, there are many people who choose to inspect the homes offered in the portfolios of the banks themselves, often with lower prices, although with some considerations.
In our new blog, we are going to talk about the pros and cons of buying a foreclosed home from a bank.
What does it mean to buy a repossessed property and why is its price usually lower?
A foreclosed home for sale by a bank is a real estate property that has been taken by the bank as a result of a foreclosure process. This usually occurs when the homeowner is unable to meet the mortgage payments and goes into default. In that case, the bank has the right to take possession of the property as collateral to cover the outstanding debt.
After the bank has taken possession of the property, it is usually offered for sale on the market. These repossessed properties are usually offered at a price below market value, as the bank is interested in recovering at least part of the outstanding debt. However, it is important to note that these properties are often sold “as is”, meaning that the buyer assumes responsibility for any repairs or structural problems that may exist.
Buying a foreclosed home can be an opportunity for those looking for properties at a lower price, but it is also essential to conduct thorough research and, in some cases, take the advice of real estate professionals to properly assess the condition of the property and understand the potential challenges associated with it.
Is it important to have the help of a professional when buying a property repossessed by a bank?
When considering the purchase of a home or property, whatever type it may be, it is always advisable to have the help of a specialised professional. Even more so in the case of a person who does not live in Spain and who has to deal with all the formalities of the complex Spanish administrative and tax system.
Here are some fundamental points on the importance of a lawyer in this type of operation:
- Document review: Documentation related to a foreclosed home can be extensive and technical. An attorney can thoroughly review legal documents, such as the deed to the property, the terms of the sale, and the details of the foreclosure process, to ensure that everything is in order and to protect the buyer’s interests.
- Identifying legal problems and outstanding issues: Foreclosed properties may have additional legal issues, such as liens, pending litigation or other complications. A lawyer can conduct thorough due diligence to identify these issues and advise the buyer on how to address them or whether they should reconsider the purchase.
- Negotiating and drafting contracts: A specialist lawyer can assist in negotiating the terms of the purchase and drafting a contract that adequately protects the buyer’s interests. This is especially important in situations where the property is being sold “as is”, as the terms and conditions must be clearly specified.
At MAM Solicitors we have over 30 years experience in the real estate sector representing clients from all over Europe and in the management of their property or real estate transactions in Spain.
Please do not hesitate to contact us with any questions you may have and we will help you in any way we can.
