Bank repossessions usually do not offer great value because the bank is trying to sell the property for more than anyone was prepared to pay at the Sheriff Auction. Bank repo’s are sometimes considered "the leftovers".
At a Sheriff Auction, the banks do not particularly want to buy the property. They would much rather it was sold to someone else so they recover their money sooner. If they have to buy the property - they incur holding costs, marketing costs and general admin costs. These costs are reflected in the price they sell it for which is usually close to market value
- All outstanding rates and taxes on the property including water and electricity
- All outstanding levies or homeowners bills
- Sheriffs commission up to a maximum of R40,000 + Vat
- Transfer duty or VAT (as per a normal purchase)
The sheriff also requires a 10% deposit on the fall of the hammer.
The second most common reason - is when a third party obtains a court order to have the property sold. This could be a body corporate, a homeowners association - or anyone else that the owner owes money. In this case, if a bank has also lent money against the property - then the bank has the right to cancel the sale if the selling price is not high enough to repay the bank loan.
- There are usually only 10-14 days notice before an auction.
- The auctions are poorly advertised, and there is no official show day or means of inspecting the property
- When there are very few interested parties the bank often has to buy the property, and the property becomes a bank repossession. Usually the bank does not bid more than 60%-65% of market value but there are cases where the bank will let the property go for 50% of market value.