What is distressed property?
A distressed property is a property that is under a foreclosure order or is advertised for sale by its mortgagee. This type of property usually fetches a price that is much lower than its market value. However, this is not always the case as it will of course depend on the existing mortgage. We must take into account the dropping of prices during the recent recession and that some mortgages are higher than the value of the property. It is important to always compare the prices on the current market.
What is the difference between distressed and repossessed property?
A repossessed property is a property that the lender takes back from the property owner through the foreclosure process. In cases where the bank does acquire a property accomplishing all the legal processes, the guarantees for the future buyer cannot be better.
With distressed properties there is always some kind of risk involved. These are risks that you do not get with repossessed properties. The reason for this, is that with a distressed property there will also very likely be debts for local taxes (council tax) etc. With this in mind, when buying a distressed property, all possible debts must be known and considered beforehand because the new owner takes on the responsibility of the last 3 to 4 years of debts that corresponded to that property.
None of this is relevant when buying a repossessed property as the bank is responsible for any previous debt.
Where to Buy?
Spain is an excellent area to consider buying repossessed properties in for a few simple reasons. Despite the recent recession, Spain is, at this moment in time, the country whose economy has grown most in the last year. The increase in sales (according to estate agencies) has been 15% in the last 12 months and we are only in August.
Is it better to have experience of property before adopting this type of strategy?
You should try to count on professional advice as much as possible. Take advice from people who are prepared to not just talk about sales, but also those that have a full view of the market, economy, law, etc.
Does it take longer to complete a purchase on a distressed property?
The Banks in Spain have a strict protocol and so can take around 6 weeks. This is good in terms of protecting the customers rights.
The risk of buying repossessed properties in Spain is ZERO when the bank is the seller. This is due to the strict measures that the Spanish Banks are subjected to.
How do you find this type of property overseas? Where would you begin to look?
Searching in the tourist areas located in the South and South East of Spain are a good choice for many reasons. This includes Murcia, Alicante, Marbella and Sotogrande (Cadiz) which are a real dream area and boast plenty of Spanish culture. These regions also have lovely weather and great facilities. The leisure options and lifestyle make them very attractive too.
Is it very competitive to secure this type of property (because lots of other investors are looking too)?
Yes, there is always a high demand for these properties. It can be quite competitive and this is where it is good to enlist the help of independent professionals doing the correct searches to find the appropriate properties
For expert advice on buying discounted property in Spain, contact Europa Estates and Finance here http://europaestates.co.uk/ or ask them a question directly through their dedicated forum here: https://www.propertyforum.com/forum/threads/forum-sponsor-europa-estates-and-finance-specialists-in-discounted-overseas-property.29892/.