Following the economic downturn many overseas property investors are looking to take advantage of repossessed and distressed properties available on the market.
In Spain particularly there are still a lot available, but with the Spanish property market having now turned the corner and showing strong growth they are quickly being snapped up.
The popular tourist areas of Southern Spain such as Marbella, Alicante and Murcia do still have repossessed and distressed properties available and excellent deals can be had.
It is important however to understand the difference between a repossessed property and a distressed property.
A repossessed property has been taken back by the bank or financial institution from the property owner. In this case the lender has then taken over responsibility for all the legal processes and debts outstanding on the property.
In the case of a repossessed property therefore, the investor would be buying from the lender and be guaranteed by them that there are no extra costs to cover. A simple transaction whereby the purchaser can get a property bargain without any potential problems.
A distressed property however is different. These are properties under a foreclosure order or advertised by the mortgagee. They have not yet been repossessed by the lender and therefore do not come with the same guarantee to be debt free.
Distressed properties almost always have debt attached, which could be for various things including local taxes. Purchasers must be aware that the new owner is legally bound to take responsibility for the last 3-4 years of debt associated with the property.
When considering a distressed property you must ensure that all debts corresponding to the property have been declared, so that you have an understanding of the full true cost of the property.
Demand for property bargains is such that you would need to be in a position to move quickly and it is worth enlisting the help of local property professionals to help you in your quest.
Great deals can be had with repossessed and distressed properties, but make sure you do your homework and cover all bases to ensure that you know exactly what you are buying.