Before going to the auction:
1. Site Visit is allowed? Will they tour you around (the bank)?
yes, site visits are allowed. this will let you assess the property yourself if it's worth the price quoted. other banks provide agents to tour you around, others do not
2. Other things to consider
you have to make a survey either through internet or the vicinity, if the property is saleable or not. if it has good potential or a future headache.
3. How do you appraise the property yourself for structural damages etc. Will the bank give you a building survey report/valuations? What structural/other damages of the property should we turn our back on? leaks, cracks etc...
based on my experience, we were able to assess the property thru occular inspection only which is not really reliable. if this is the only way, better to assume that leaks and cracks are existing among other worst things to consider. example clogged drainage? or termite infestation. for structural damages,better if you hire an experienced engineer who you can trust.
bank will not provide valuations, but sometimes agents give you tips.
5. What other property related issues should we avoid - occupied by squatters etc...
occupants is one major factor that you will have to consider. this will definitely cost you. also i veer away from former owners who are occupants for humanitarian reason.
6. It seems that cheaper properties would be the best range to market particularly they are in most need of rent to own/lipat agad scheme. What would be the best selling price range?
i remember KB saying middle income earners are the best target market. best selling price is 1.5 to 3M.
During and after the Auction:
1. Can you really negotiate with the other bidders to avoid any bid war? is this legal?
yes, this can be done. unless it is stipulated in the pre-bid contract that it's not allowed. though i heard rumors that bank themselves get dummy bidders to increase bid value, this you also have to take note of.
2. I gather it's 20%DP to allow you to take over the property for development. What are the other expenses/bank charges to consider either in value or in percentage of the property.
some banks charge real estate tax and attorney's fees for the notary of contract other banks don't.
3. What documents are needed from me, the seller and the bank that needed to be presented, signed and handed over to each parties.
during the auction: bank will ask you to bring 25k for deposit if you win the auction. award certificate will be given to you by the bank if you win the auction.
after the auction: bank will give you contract to sell, after you have completed the 20% DP, among other requirements.
4. How long before you can acquire the property, market it and start the refurbishment.
depends on the bank, how long they finalize documents. though once you've completed the 20% DP, you can already start refurbishing. you just ask certification from the bank allowing you to occupy property.
5. I gather that both of you are in the construction business as well. How do we deal with this when getting the purchased property refurbished? Surely it would cost a lot to hire a builder. How should we deal with this?
our company is into construction business particularly management meaning we provide consultation and we give advices. yes, it will cost you a lot to hire a builder, so better if everything (contracts) is in order to avoid unnecessary mistakes.
On selling the property:
1. How do you market it?
You can put a tarpoulin: "FORECLOSURE BARGAIN, CALL: XXX" OR "HOUSE AND LOT AT BARGAIN PRICE, CALL: XXX"
Increase commission rate up to 10% to entice more agents to market your property. Just sit down, relax, sip a coffee and wait for a successful transaction. Let the agents do their work.
2. How do you approach an agent/broker to assist you in selling your property?
You don't have to approach them. By word of mouth through competitive commission rate, a very willing agent will surely approach you.
3. Fees involved - is it only when its sold or do they have a listing fee? what percentage is their commission? is the % from profit or from the actual sale?
We give a minimum of 5% of the Total NET Contract Price (Straight-NO TAXES). Net- Meaning, we will deduct the other charges and marketing expenses from the Total Contract Price.
4. How do you assess interested buyers capacity to pay? Other points to consider.
If you can, you can require them to submit bank statement of account. We have devised a form, "Buyer's Information Sheet" indicating questions regarding their sources of income, assets and liabilities and their current Net Worth.
5. It's a bit silly if you don't earn anything. What would be considered a good profit/sale in this market (200,000/sale etc...)? And for what period should we aim to sell the property? I know it should be as quick as possible but in reality it doesn't happen like this.
Php 200,000.00 is the MINIMUM Net Income per transaction for the properties below Php 1.5M. Php 500,000.00 is the MINIMUM Net Income per transaction for properties below Php 2M. That should be the target.
6. What's the current payment terms available for new housing developments? Just so we know the competitors on the market particularly pag-ibig housing program and similar...
It's 10% Down Payment to Move-In. But DO the MATH first. This is not always viable.
Issues/Action Plan
1. Failure of buyer to pay - bounced cheques
Post-Dated Checks are very essential for this business. Bounced checks are proof of NON-PAYMENT and shall be the reason to exercise your right to RESCIND the Contract To Sell. So, require your Tenant-Buyer to submit post-dated checks for monthly payments or amortization.
How do you tackle this? what's the boundaries. What's your trigger - failed to pay for 3, 6 or 12 months
3 Months of Non-Payment shall be the ground to RESCIND the Contract.
2. Inconsistent - delayed payments/those in arrears, then will try to catch up for a few months and then repeats itself.
Maximum delay of payment shall be 2 months only.
3. What's your penalty charged for delayed payments.
We charge 3-10% penalty for late payments.
4. If the decision had been made to acquire the property from the buyer, how long will this take. I've heard news where properties had been loaned to banks, with the owner in arrears for a year or so but the bank still failed/has yet to acquire the property from the homeowner. Wouldn't this happened to us being a small time without all the resources/connections banks have.
There is a one (1) year redemption period for a foreclosed property. The bank gives opportunity to former owner to redeem the property prior sonsolidating the Title under bank's name.
In case of eviction of your tenant-buyer, remember that your case is different from the bank. The TCT is under your name and NOT your tenant-buyer, thus, eviction process is easier compared to a mortgaged property of a bank.
5. Legal procedures to follow and fees involved.
Study MACEDA Law. I am blessed to have lawyer-friends who give FREE advice. But they are NOT always free.
I have to bring them at Saisaki/Dad's/Kamayan for free dinner. For the legal fees in case of eviction, set aside a buffer budget of Php 50,000.00 per property.
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