The process of foreclosure begins when a homeowner failed to pay his/her mortgage (maybe because of loss of source of income and/or due to personal reasons). Foreclosure of a real estate property involves both legal and extra-judicial undertakings. In Philippine setting, our culture and among other things complicate the foreclosure proceedings.
Most buyers want to save money because foreclosed properties are priced lower than those in the market. Location is another reason why buyers prefer foreclosed properties.
Buyers must conduct due diligence and verify if there are unresolved ownership issues, informal settlers, unpaid bills, missing documents or records, etc. Also, foreclosed properties most of the time need repairs at the expense of the buyer.
The buying process involving a foreclosed property is longer compare to a regular transaction. Below are the basic steps in purchasing a bank-owned property:
1. Conduct due diligence. View or inspect the property.
2. Completely Fill-up the offer to purchase form and buyer’s information sheet and other documents.
3. Submit basic requirements (husband and wife if applicable):
- Completely filled-up offer to purchase form and buyer’s information sheet. Click to download Offer to buy form here:
- Valid ID’s, proof of income (ITR, Employment Certificate, Bank Statement), Marriage Contract
- If self employed, submit business papers and other financial documents
- If OFW, submit proof of remittance and POEA contract and Special Power Of Attorney, Proof of Dual Citizenship (if applicable)
- Other requirements that the seller may require
4. After submission of the required documents, buyer will wait for the notice if offer to purchase is approved or not. The said notice will include the terms and conditions.
5. If buyer agrees to the terms and conditions, he/she will pay the seller and sign contracts and related documents. If the transaction involves bank loan component, a separate approval for the bank loan is needed.
6. After all the approvals were secured, the seller will advise the buyer about the date and time of turn-over of property.
7. Some banks have third-party service providers contracted to process the transfer of title but there are also instances that the buyer will be the one to process the transfer of title.
Because buying a foreclosed property is more complicated than a regular transaction, it is best to engage the services of a licensed real estate broker (most of the time buyers may have it for free!). The common practice in the Philippines is that, the seller is the one paying for the services of a real estate broker (while in other countries, the usual practice is that both buyer and seller pay for the services of a real estate broker).
MegaManila Realty since 2009 has been providing real estate related services to real estate developers, RCBC Commercial Bank, Philippine Savings Bank, Banco De Oro, Bank of Philippine Islands, Asia United Bank and other banks in the Philippines.