Q&A: Is It Advisable to Buy a Foreclosed Property?

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Q: What is a foreclosed property?

A: “Foreclosure is a legal process in which a lender attempts to recover the balance of a loan or a property from the borrower who has defaulted in repaying the loan,” according to Wikipedia. The property that serves as the collateral is sold to recover the loan.

Q: Are foreclosed properties common in Ghana?               

A: According to an expert in the industry, foreclosures are common in Ghana — it is something that happens regularly with a number of financial institutions like HFC Bank, Ghana Home Loans and Fidelity Bank.

Q: What is the process of foreclosure auctions in Ghana?

A: An auctioneer is appointed to auction the property. There are instances in which the banks auction the properties themselves. They can also do sales bidding where interested parties send a bid to the financial institution.

The foreclosure listings are advertised in the newspaper or are sold through an auctioneer. It is important that the borrower whose property is auctioned be not disadvantaged, so the auctioneer has to make sure that an evaluation report is done and the value becomes the minimum acceptable price. Anything above that price can be quoted.

Q: Is it advisable to buy a foreclosure?

A: If you can afford it, it is advisable to buy the property. However, it is sometimes difficult to buy this kind of properties, since financial institutions are more reluctant to grant mortgages for home foreclosures. One key thing to remember is that during the auction, one has a short time-frame to make the funds available. You must make sure that if you are not going to pay cash you should have access to a quick financing.

Q: What are some of the factors to consider when acquiring foreclosures for sale?

A: You need to get the documents from the auctioneer to make sure that the auctioneer has been given the legal rights to sell the properties. After, they have to show that the documents  prove that this property was bought, but the owner has defaulted all necessary steps to recover the funds, which has been impossible. It is important to ensure that the foreclosure process has been followed before the property is auctioned because if you buy the property and the borrower is able to go to court to prove that they were disadvantaged in the process, the law can rule in their favour.

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