Ten Tips for Buying Bank Repossessed Property in Australia

The property market in Australia has almost mirrored the one in the UK in terms of its fortunes which have flowed and which are now ebbing away for some people.  As a result, just like in the UK, Australia is witnessing a massive rise in the number of homes being repossessed at the moment.

The government has put pressure on lending institutions to apply a little more leniency to cases where homeowners have repaid well in the past and are only now encountering financial difficulties, however, that hasn’t stopped there being a strong increase in the numbers of homes being repossessed.

For those on the receiving end of eviction notices, the rise in this rate is a terrible and awful fact.  For those hoping to get on the property ladder Down Under, who are moving to live in Australia, or who recognise the investment potential in many Australian cities, here are ten tips for buying bank repossessed property in Australia – because it can truly be a great way of getting in to the market.

The first thing to note is that buying a repossessed property can be quite a complex and stressful undertaking, so you need to be really prepared for the ride.  If you’re buying a home to live in, we would urge you to ensure that you’re in Australia when you go to auction to bid.  You can employ agents to work on your behalf, but if you have not viewed the property for sale, you have not examined the area it is in and the state it is in, you could be setting yourself up for a big fall.

The second thing to bear in mind is that the vast majority of these homes are sold at auction, and to buy at auction you have to have your money in place before you even begin thinking about bidding.  So, if you will be buying with a mortgage you have to have that mortgage agreed in principle from a lender, and have a certificate to prove that you can get your hands on the sum assured.  If you’re going to be transferring money in to Australia from accounts held elsewhere, think about exchange rate fluctuations, and speak to a currency specialist to see how you can secure your transfer against a negative blip in the FX market.  With these essential angles covered, here are our 10 top tips for buying bank repossessed property in Australia: -

1) Whether you’re buying a home to live in Down Under or you’re buying an investment property to let out, you need to examine the property in light of your expectations of it and for it.  I.e., if you’re going to be living in it, is it located in a neighbourhood that suits you, if you’re going to be renting it out, does it have the space you need, does it match your target rental market’s requirements for it?

2) Find out what the appraisal value of the home is – and focus on this.  Is this a value you are comfortable paying for the property – could it be worth a lot more than this price?

3) Scrutinise the state of the property externally and internally.  Look at everything from the foundations to the roof, from the electrics to the plumbing.  Is there dry rot?  Termite damage?  Will you need to redecorate or renovate?  Factor in all of the extra costs you will incur if you are successful in your purchase.  Add this on to the expected auction price and see whether the home still looks like a bargain.

4) Get surveys done if you are very serious about the property but you are unsure about its true state – remember, a few dollars spent at this point on such matters could be thousands of dollars saved down the line if your surveys determine that the home is in poor repair, and thus you decide not to buy it.

5) If you decide to use a broker to search and/or bid on homes for you, check up front what their commission will be and how you have to pay it.

6) Before you begin bidding on the property at auction, be sure you know how the process works, when you will be required to pay a deposit and when the final sum will need to be paid.

7) Think carefully about using a professional to bid for you – they won’t go over your budget, they won’t get carried away by the excitement of the bidding war – what’s more, by engaging their services early on, they’ll be able to give you a fair idea of what the property is ultimately worth, and what you should think about paying for it.

8) Know that the auction process can be fast and furious and that you may find yourself bidding against determined buyers with deep pockets.  Be ready for your lot, have your ceiling and stick to it.  If you do decide to take on the bidding yourself, start the bidding low, don’t appear too keen.  Stop if the property goes over your budget – yes, you will be massively disappointed, but you won’t be in financial difficulty.  And there is always more than one perfect property.

9) If you are successful at auction – congratulations – now check that all the paperwork is 100% in order with the sale.  Use a solicitor, don’t be tempted to go it alone as you never know what you might find…

10) Now, be patient, even though it seems to all happen so quickly up to this point and you are required to have your money in place and be ready to go immediately, you are buying a home from a bank at the end of the day, and as you well know they are slow moving beasts and they can drag out the final handover process for no known cause!

If you are examining repossession properties for sale in Australia do so with caution and do so carefully.  There are many bargains to be bagged, but ensure that you are buying through a reputable auction house and that if you are unsure of anything at any step of the way, seek professional advice.