Issues with buying a bank owned home

Buying a bank owned home can be a great way to get your dream home at a much reduced price. And in the current economic setting there are plenty of deals in REO (real estate owned) property, to be sure. However, the reduced costs do come with a few extra issues that potential buyers must be aware of. Namely, doing a property title search to seek out past-due taxes and different lines, totally inspecting the property before getting, and learning the way to negotiate with banks for a higher deal. This text can assist you address a number of these concerns:

Property taxes and other liens

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Foreclosures and REO's are notorious for having liens. Liens are claims placed on the property for outstanding debts. If you purchase a real estate property, you're also buying any and all liens that may be outstanding. All liens should be recorded in the public records and will should show on a thorough title search. It goes without saying that a thorough title search must be performed on all REO/bank owned properties before purchasing.

Getting a better deal

Banks aren’t within the business of owning homes. They want to get rid of their foreclosures as quickly and effectively as they possibly can. So, by definition, you are managing a reasonably impelled vendor once getting a bank in hand home.

This doesn't mean they'll take "anything" for the property, and they do know what it's worth, but there is often some wiggle-room to be gained in your offer. Don't be afraid to place an offer quite a bit below the asking price, you may be surprised to find your offer accepted. 

The property's condition

Many foreclosed properties are in poor condition. With the previous homeowner losing their home, there's a good chance they didn't care about, or could not afford, to maintain the home state. Additionally, the bank isn't in the business of making repairs and maintenance on their properties, so it is easy to see why this could be the case. A very thorough inspection of the real estate property is imperative with any home purchase, but much more so on real estate properties that are in foreclosure or owned by a bank. 

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Rising Interest Rate Pose Real Threat

Residential property prices have increased by up to 10% in many major cities according to the latest data from the National Housing Bank.
The big positive that can be drawn from the current scenario is that the government recognises that a boost in the real estate market will help the weakening economy but this can only happen if construction costs are brought down and people are encouraged to buy their own homes. Banks and finance companies are still wary of financing the real estate sector.

A report from Cushman & Wakefield states that across the whole of India some 11.8 million units/homes will be needed by 2016. The figures are based on past trends for population and household growth and the income classification for households.
But there is a grave problem that lies in the middle of realising a well funded infrastructure for such residential projects and that is the hike in interest rates.
Rising interest rates in India are having an impact on the real estate market and are proving to be a deterrent to the sector, according to the Royal Institution of Chartered Surveyors (RICS).
There has been robust economic growth but that has created challengers for the property market, developers and builders. Political instability and indecision, allegations of corruption, issues relating to the environment and land acquisition, regulatory delays and inefficiencies have all negatively impacted on investment demand.
Surging interest rates in the country have also been a tremendous cause of concern. With several rate revisions having already taken place in the last year in order to dampen growing price pressures, RICS expects that a further interest rate hike is unlikely, at least in the near future.

Consumers too have been impacted by the steady hike in interest rates. With cost of borrowing becoming dearer on one hand and price escalations on the other, consumer sentiment has been adversely affected and the uptake in housing stock has seen a slowdown, resulting in over supply in some markets. Additionally, with inflation high and rising, real interest rates are extremely accommodative and have also started to exert upward pressure on commercial property prices.

Retail property, on the other hand might see an uptake with about 50% FDI allocation from last year. However, given the lack of political and economic consensus on the decision, international retailers may play the wait and watch game, prior to setting up business in the country.

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Noida Extension buyers want banks to waive interest

The authority of Greater Noida is offering builders with a ‘zero period’ for paying installments. The home buyers are not too happy with it and demand from the lending banks to make all the EMIs interest free paid during the land row.

Bank

80 home buyers have formed a group and have joined hands to mount pressure on banks to waive off the interest on their EMIs. According to the buyers, banks are also to be blamed in the Noida extension real estate mess. They did not completely verify the viability of the projects which is why they charge processing fees from the buyers. They have threatened to undertake a legal action against banks if they disagree to provide financial relief to them by sharing the burden.
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Bank officials alternatively, are exploring options to deduct amount of interest from the future EMIs. They are examining legal provisions for the interest waiver.

The buyers alleged, that banks stopped disbursing further installments after the land row but continued to take EMIs from them with interest, that too, especially when they had already paid a hefty processing fee to the bank at the time of loan disbursal.


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