There is a chance that short sales in the Philippines increase during the coming months as some property owners look to get out from under mortgages. While we still don’t know what the economic impact of the on-going COVID-19 pandemic will be, some property owners concerned about being foreclosed upon will put their home on the market.
What are short sales in the Philippines?
A short sale is when a homeowner agrees to sell their property for less than the total amount of what is owed on the mortgage. It is sometimes called a pre-foreclosure sale since these are properties usually heading for that.
What are the benefits for the buyer?
For buyers, a short sale allows them to purchase property at a below market value price.
What are the benefits for the seller?
Firstly, a short sale means they avoid the unpleasant foreclosure process. It can also allow the seller to find a more favorable agreement with the bank regarding the outstanding loan principle. And most importantly, they won’t have the burden of a foreclosure on their financial records.
What are the negatives of short sales in the Philippines?
Since these transactions are done quickly, buyers are usually forced to make a quick decision. It can be hard to complete due diligence that would be done under normal circumstances. The compressed timeline means sellers often leave money on the table since they can’t wait for more bidders. Both buyer and seller need to find a bank willing to take on the transaction which isn’t always easy.
What should buyers look for?
You will want to know if there are any unpaid liens against the property. Debts from things such as outstanding repair bills are transferred to the buyer as part of the transaction. Also, make sure have a professional inspect the property and see if any major maintenance is required. This could influence your purchasing decision. Finally, make sure the paperwork is current and legal. Fake titles are still floating around and because short sales are rushed in nature, some buyers forget to have the documentation authenticated.