Nowadays, foreclosure houses have gradually entered the public's field of vision, but there are still many people who know little about it. Sometimes, we compare foreclosure homes to regular second-hand homes because, from some angles, they are similar. Today, we're going to explore in detail the differences between buying a foreclosure home and a second-hand home.
1. Purchase costs
Secondary:
Second-hand home prices are usually set by the owner, comparable to the market price, and have a limited range of discounts. The cost of buying a house includes the market price, brokerage service fees, and taxes.
Foreclosure room:
The price of foreclosure houses is determined by the court after market assessment, usually 6~8% off the market price, plus taxes and judicial service fees.
Auctioned properties will set a relatively low starting price, usually well below the market price. The final sale price depends on the bidder bidding, with the highest bidder getting the property. For some properties, due to the small number of bidders, there may be a situation where the transaction price is much lower than the market price, which is also called "leakage".
2. Purchase channels
Secondary:
Buying a second-hand home usually requires finding a listing through an agency or online platform. In order to maintain monopoly and increase the competitiveness of the platform, these platforms are occasionally interfered with by false information.
Foreclosure room:
Foreclosure houses can only be purchased through statutory auction platforms, such as Ali Auction, JD Auction, Public Auction, etc. Listings on auction platforms are transparent and free of false information, but sometimes the situation may not be clear enough.
3. House purchase process
Secondary:
Buying a second-hand house usually involves agreeing with the seller on a viewing time, and after the viewing, after the two parties reach an intention, pay a deposit, agree on the payment method and delivery time. Next, the buyer pays according to the agreement, and then completes the procedures such as the transfer of the house through the relevant agencies. Finally, the seller delivers the house.
Foreclosure room:
The process of buying a foreclosure home is relatively simple. The court stipulates a uniform viewing time, and buyers need to pay a deposit on the auction platform to qualify for the auction. After successful bidding, you need to pay the transaction amount and wait for the court to issue relevant legal documents.
After that, the buyer can go to the relevant agency to complete the transfer procedures, and after completing the transfer, the court will assist in vacating the house. Compared to second-hand houses, the transfer process of foreclosure houses is more simplified.
4. Payment requirements
Secondary:
When buying a second-hand house, both parties can agree on how to pay, with greater flexibility. But if the seller needs to repay the mortgage or apply for a mortgage, it may take more time, usually 1-2 months.
Foreclosure room:
Buying a foreclosure house requires the transaction amount to be transferred directly to the court's public account, but there is a clear time limit, usually about 10 working days. If the time limit is exceeded, the court may take back the right to purchase and forfeit the security deposit.
This is why foreclosure loans are different from ordinary mortgage loans, which require a short period of time, while ordinary mortgage loans do not have this kind of rapidity.
5. Mortgage method
Secondary:
When buying a second-hand home, it is possible to apply for a loan according to local policies, with a down payment of 30% for the first home and 60% for the second home. You can choose to apply for a CPF loan, a business loan or a combination of both.
Foreclosure room:
When buying a foreclosure house, you can apply for a mortgage loan according to the local mortgage policy, and the loan percentage, interest rate, and term are the same as ordinary second-hand houses, but you are not allowed to use provident fund loans or portfolio loans, and you can only apply for commercial loans.
Foreclosure houses have some flexibility in terms of down payment and can make up for the funding gap to some extent, which is one of their comparative advantages.
6. Check-in time
Secondary:
Generally speaking, after buying a second-hand house, the original owner will move out after agreeing to pay the final payment, and the new owner can move in. Although there may be some controversy, such cases are relatively rare and check-in times can usually be controlled.
Foreclosure room:
When buying a foreclosure home, some executors may resist or try to prevent the buyer from moving in. In this case, the court may need to assist in vacating the property, but the court usually does not make a commitment to the check-in time and therefore does not have full control over the check-in time.
To sum up, buying a foreclosure house and a second-hand house has its own advantages and disadvantages. Therefore, when choosing to buy a property, it should be considered comprehensively according to your own needs and circumstances.