In South Africa, repossessed properties (also called bank repos, sheriff’s sales, or properties “in possession”) are homes taken back by a bank or sold via court order because the owner defaulted on their bond. These properties are then resold to recover the outstanding debt. For buyers, repossessed properties can present a unique opportunity, but they also come with risks.
Where to Find Repossessed Properties
- Bank property divisions: Major banks like ABSA, Nedbank, FNB, and Standard Bank list repossessed homes on their websites.
- Sheriff’s auctions: Properties sold by public auction after a court judgment.
- Private listings: Some repossessed homes are marketed through estate agents.
Advantages of Buying Repossessed Property
1. Lower Purchase Price
Banks and sheriffs are motivated sellers. Properties are often listed below market value to recover outstanding debt quickly, giving buyers the chance to secure bargains.
2. No Transfer Duty (in some cases)
If you buy directly from a bank (as the registered owner after repossession), you may be exempt from transfer duty, only paying attorney transfer fees. This can save a significant amount, especially on higher-value homes.
3. Opportunity for First-Time Buyers and Investors
Repossessed properties are often in established suburbs where new developments are scarce. This gives first-time buyers and investors access to desirable locations at more affordable prices.
4. Negotiation Room
Banks typically want to dispose of repossessed stock quickly. Buyers can sometimes negotiate on the price, deposit terms, or occupational rent.
5. Potential for Quick Capital Growth
Buying below market value means there’s often immediate equity in the property. If renovated, the property’s value can rise further, boosting returns for investors.
Disadvantages of Buying Repossessed Property
1. "Voetstoots" Condition
Repossessed properties are usually sold “as is”. This means the buyer inherits all defects — structural, electrical, or plumbing — without recourse against the seller (bank or sheriff). Renovations may be necessary, adding hidden costs.
2. Occupancy Challenges
Some repossessed homes may still be occupied by the previous owners or tenants. Eviction can be a lengthy, stressful, and costly legal process for the buyer.
3. Possible Arrears
The buyer could be liable for outstanding rates, utilities, or levies on the property. While some banks settle arrears before transfer, this is not guaranteed in sheriff’s sales.
4. Limited Viewing Access
In sheriff’s auctions, buyers often cannot view the inside of the property before bidding. This increases the risk of buying a home with major unseen problems.
5. Financing Complications
Banks may be reluctant to finance a repossessed property if its condition is poor. Buyers may need extra cash for repairs before a bond can be granted.
Tips for Buyers
- Do your research: Compare prices in the area to ensure the “bargain” is genuine.
- Budget for repairs: Factor in renovation costs when deciding your maximum offer.
- Check arrears: Confirm with the municipality or body corporate if there are outstanding rates or levies.
- Legal advice: Use a conveyancing attorney to guide you, especially with sheriff’s auctions.
- Consider cash reserves: Having cash ready strengthens your bargaining power and speeds up the transfer.
Conclusion
Buying repossessed property in South Africa can be a smart move for both first-time buyers and seasoned investors, offering attractive prices and opportunities for equity growth. However, the risks from hidden defects to occupancy battles mean careful research, professional advice, and financial preparedness are essential.
If approached strategically, repossessed properties can unlock excellent value in the property market, but they are not a shortcut to easy wealth.