Buying Bank Owned Property

[Mike45]

I am lookig at the possibility of buying some bank owned property. I would like to know if any one has any experience in buying some. Are the prices negotiable or are the banks holding firm on the properties prices. Any pit falls I should watch for other than whose name to put the property in?

Thanks

[Thaipwriter]

Most good deals go to local big guns who are tipped off by bank staff.

Whats left is often unrealistically priced, poor condition and derelict.

Best avoided generally unless you are well read on the state of play in the property market.

A high percentage of the stuff advertised by banks now is the dregs of the 56 finance companies that went <deleted> up in '97. no-one wants them but the prices are not discounted.

[chuchok]

from what I understand, you have to bribe somebody at the bank, so that you are the only bidder etc.

[GuestHouse]

No shortage of the usual 'Thais are out to get us Farang' <deleted> here I see.

My wife and I have bought land from both the courts and the bank, in both cases we had no help from any third party, no 'under the table' payments were made and it was clear that we were a mixed Thai/Non Thai couple making the purchases.

Both purchases went through without a hitch.

Moreover, when we discussed our purchase with one of the leading Law firms in BKK the lawyer commented that buying from the courts/banks is one of the best ways of avoiding high costs while at the same time being assured of getting a 'real' tittle dead.

First you need to understand how the banks come to have the land/property in the fist place.

Contrary to popular belief, the banks do not simply sieze property in lieu of debts: What actually happens is the banks take debtors to court and the court siezes the property to pay off the debt owed to the bank.

It is the court that settles the debt by ceasing and then selling the land/property.

The banks sell the property through open auctions: There are four actions for each ceased piece of land/property, at each action the start price drops. Now I know what you are thinking, ‘some big wig Thai who hates Johnny foreigner gets all the best deals’…. Well not if he hasn’t got an internet connection he doesn’t.

Yes, these actions are announced on line

http://asset.led.go.th/newbid/asset_search...ate=&page=5

OK they are in Thai, but hey! You’ve decided to live in Thailand, learn the language… or get the little lady to help.

But of course the land/property might not sell, the land/property is returned to the bank for the bank to try and sell.

Alternatively, if the price in the action drops to a point where the bank think there is some value left that they can get their hands on, the bank might very well buy the land/property from the court.

So now the bank have got the land/property. How are they going to get rid of it.

Something else you need to know. It might look like the bank have the land/property, but actually they do not. An asset management company has the land.

The asset management company bought all the Banks bad debts at a knock down price, so that the bank could stay in the business of banking (and to make a tidy profit on the side).

What the bank sold the land for less than it is really worth?

Well nominally yes, but they sold a debt and traded the loss against taxes… Taxes are what you and I pay but what rich people,... and banks…. do not pay.

Anyway, the land/property you covert is now owned by a company that looks like the bank, resides within the same offices as the bank but is not actually the bank.

This asset management company sell the land for a price above the ‘debt rate’.

‘What is the debt rate?’

The debt rate is the amount of money outstanding on the debt for which the land was grabbed ..plus all legal fees etc.

So the debt rate might be a few hundred thousands on a piece of land worth ten million.

Now you know why banks (oops sorry, asset management companies) are so keen to sell this land.

‘How do they sell the land?’

Before I tell you can you please do me a favour… wipe your chin, you’re salivating.

The Asset Management Companies do exactly what the courts did, they sell the land in an online action.

But here’s a twist…. They ask a price, and you are allowed to offer less.

But where do I find these Asset Management Companies Auctions?

Before I tell you can you please do me a favour… wipe your brow, you’re sweating like Garry Glitter in Mother Care.

What did I tell you about the Asset Management Companies? They look like the banks, they share the same offices as the bank they are trying not to be… well guess what?

They share the same website too.

Go to any of the bank websites and you’ll find a link to property sales.

“I did but they are in Thai and I can’t read Thai’… You chose to live here…. Oh never mind.

Anyway, they have clear instructions on how to bid for the land.

‘How much should I bid?’

Up2U.

If you know the ‘debt price’ add 20%, otherwise offer what you are happy with.

But before you make an offer.

Be aware that you are going to have to come up with the cash, very quickly. Usually within days of your offer being accepted.

Also be aware that you will be expected to pay the taxes.

OK you might get the Asset Management Company to pay the taxes, best of luck, we didn’t manage to.

So there you have it.

There is no anti Farang conspiracy, there are people who are willing to make an effort and go look for the land they want, and if they are lucky they get exactly what they are looking for.

We did.

[Edit - We bought both our land and house while we were overseas, only coming to Thailand to do the paperwork and pay the money over]

I wish you the best of luck too.

Oh and the Thais needn't go out of their way to get you.

Once you have bought the land/property of your dreams, they have both your money and their land/property.

But that's another thread.

Edited October 16, 2006 by GuestHouse

[GuestHouse]

Oh another thing on that 'offer' you are going to make.

If you want.. I mean really want... to get the land or property, offer a bit over what you think others might offer.

We bought ten rai of river front land in a exactly the area of a town we wanted to buy in for less than 2% above the closest competitor's bid.

My Mrs moaned about how much we offered.. but we got our dream property.

At a price less than a 1/4 of the price it would be four years later.

[sbk]

Informative post GH, thanks. One question, our bank has several notebooks in their branch office full of properties for sale , from all over the country. Is this the same thing listed on their site or would the info on the site be more up to date?

[udon]

Guesthouse...... you're in the grip of the grape, methinks

[onlooker]

Take a look at Thailisting.com . Searchable in English but detailed info is in Thai - loads of properties from banks.

[listenup]

Thanks GH for the excellent info!

[Crossy]

Before I tell you can you please do me a favour… wipe your brow, you’re sweating like Garry Glitter in Mother Care.

GH, cheers for the excellent info, and a smile on a cold, damp, Rotterdam morning

[GuestHouse]

I had this question in a PM, but I'll answer it here:

Could I ask how far under the official appraisal the bids tend to be? For instance I saw something I liked that is maked "ราคาประเมินเจ้าพนักงาน 1,182,000 บาท" which I believe means government appraisal or estimate. Is that where the bidding should be, a starting point, or just the ballpark of what it is worth with winning bids usually under this?

Both the courts and the banks (Asset Management Companies) have an estimated value, the difference is, the court will only accept an offer over the value, while the bank may accept offers under the value.

The reason for this is the court is bound by the laws governing asset siezure to get the best price fpr both the debtor and the creditor, while the banks (Asset Management Companies) are selling land/property that they themselves own- they will normall accept any reasonable offer above the 'debt price'.

However, they are in business, and if they think they can get more money, they will hold out for a better offer.

Something to Note: The banks (Asset Management Companies), assess values at their central office, not at the local office - or at least the local office makes and estimate and the central office approves it, often sending an assessor to do a survey.. this takes some time.

Which brings us to the question:

One question, our bank has several notebooks in their branch office full of properties for sale , from all over the country. Is this the same thing listed on their site or would the info on the site be more up to date?

Yes this is nominally the same thing, but in our experience the website was more up todate, I'll explain later. Suffice it to say that when the bank (Asset Management Companies) receives the land from the court, they go off to make their own assessment of its value, this takes time and in our experience the sale was announced on the website.

So our experience was: We found our land at the court records office, but when we asked it had already been sold. The buyer, we were told was the bank. We were told how much the bank paid for the land, and because we saw the court records we knew the debt price (or at least had an idea of what the debt price was).

We then asked at the bank if they were selling the land. The manager new the land had been bought back by the bank, but told us the land was being assessed at head office.

We returned overseas and I logged onto their website first thing every day for over three months. When the plot came up with the ask price, my wife and I discussed how much we were willing to offer.

We knocked 20% off the ask price as our offer and within days were told our bid had been accepted.

You should understand the 'debt price' was a fraction of the 'ask price', But we were willing to pay a fair price for the land we wanted.

At the time we were buying there were plenty of 4..5..6..10 rai plots going begging (plots ideal for mini moo barns).. and there is your problem. The economy has picked up and builders are running around desperately trying to find plots of land to build on.

So the price you offer has to be reasonable, not so low that you are going to be outbid, or where there are no other bidders not so low that the bank decides to wait.

I think going for a 20% discount OR making an offer that you are happy with is the best option.

A word of caution, the bank (Asset Managing Company) expects to be paid very quickly after the offer is accepted.

We were overseas at the time of both our purchases hence we had to rush back and wire money at very short notice. Such short notice that I bought our house on my credit card (wired the money to my card and then used the card to buy the house) - I can still see the look on the manager's face when the transaction (withdrawl of cash) was approved but the Credit Card Company.

Guesthouse...... you're in the grip of the grape, methinks

Caramino 2004 (Nebbiolo) at a fraction of the price of Borollo.

Edited October 17, 2006 by GuestHouse

[Tywais]

Calm it down a bit gents, my delete finger is not tired yet.

[Mike45]

I had this question in a PM, but I'll answer it here:

Could I ask how far under the official appraisal the bids tend to be? For instance I saw something I liked that is maked "ราคาประเมินเจ้าพนักงาน 1,182,000 บาท" which I believe means government appraisal or estimate. Is that where the bidding should be, a starting point, or just the ballpark of what it is worth with winning bids usually under this?

Both the courts and the banks (Asset Management Companies) have an estimated value, the difference is, the court will only accept an offer over the value, while the bank may accept offers under the value.

The reason for this is the court is bound by the laws governing asset siezure to get the best price fpr both the debtor and the creditor, while the banks (Asset Management Companies) are selling land/property that they themselves own- they will normall accept any reasonable offer above the 'debt price'.

However, they are in business, and if they think they can get more money, they will hold out for a better offer.

Something to Note: The banks (Asset Management Companies), assess values at their central office, not at the local office - or at least the local office makes and estimate and the central office approves it, often sending an assessor to do a survey.. this takes some time.

Which brings us to the question:

One question, our bank has several notebooks in their branch office full of properties for sale , from all over the country. Is this the same thing listed on their site or would the info on the site be more up to date?

Yes this is nominally the same thing, but in our experience the website was more up todate, I'll explain later. Suffice it to say that when the bank (Asset Management Companies) receives the land from the court, they go off to make their own assessment of its value, this takes time and in our experience the sale was announced on the website.

So our experience was: We found our land at the court records office, but when we asked it had already been sold. The buyer, we were told was the bank. We were told how much the bank paid for the land, and because we saw the court records we knew the debt price (or at least had an idea of what the debt price was).

We then asked at the bank if they were selling the land. The manager new the land had been bought back by the bank, but told us the land was being assessed at head office.

We returned overseas and I logged onto their website first thing every day for over three months. When the plot came up with the ask price, my wife and I discussed how much we were willing to offer.

We knocked 20% off the ask price as our offer and within days were told our bid had been accepted.

You should understand the 'debt price' was a fraction of the 'ask price', But we were willing to pay a fair price for the land we wanted.

At the time we were buying there were plenty of 4..5..6..10 rai plots going begging (plots ideal for mini moo barns).. and there is your problem. The economy has picked up and builders are running around desperately trying to find plots of land to build on.

So the price you offer has to be reasonable, not so low that you are going to be outbid, or where there are no other bidders not so low that the bank decides to wait.

I think going for a 20% discount OR making an offer that you are happy with is the best option.

A word of caution, the bank (Asset Managing Company) expects to be paid very quickly after the offer is accepted.

We were overseas at the time of both our purchases hence we had to rush back and wire money at very short notice. Such short notice that I bought our house on my credit card (wired the money to my card and then used the card to buy the house) - I can still see the look on the manager's face when the transaction (withdrawl of cash) was approved but the Credit Card Company.

Guesthouse...... you're in the grip of the grape, methinks

Caramino 2004 (Nebbiolo) at a fraction of the price of Borollo.

Thanks GH for all your information. I think I understand the procedure.

I understand your comment about "paying a fair price" I just wish it was that poor soul that lost the land that made the money instead of the asset management company.

Is it posible to find out which properties are in the process of being seized by the courts. Then you could negotiate with the owner before he lost it. He can make some profit and you could probably still pay less than you would to the asset company because all the legal fees will be avoided.

In your example you were able to find out the "debt price" because you found out what the bank paid to the court. But did knowing the debt price really matter in the end?

If you don't know the debt price I suppose you could still bid 20% under the asking price. What are your thoughts on this?

[GuestHouse]

Is it posible to find out which properties are in the process of being seized by the courts. Then you could negotiate with the owner before he lost it. He can make some profit and you could probably still pay less than you would to the asset company because all the legal fees will be avoided.

In your example you were able to find out the "debt price" because you found out what the bank paid to the court. But did knowing the debt price really matter in the end?

If you don't know the debt price I suppose you could still bid 20% under the asking price. What are your thoughts on this?

I'm of the opinion that buying from the court/bank offers a huge advantage with respect to assured Title, and that there are no real advantages in getting mixed up in someone else's debts.

For a start the deeds will be lodged with the bank/court, and the only way to get them back would be to pay the debt off for the debtor and then risk them running off with the paid up deeds - or more likely hiking the price.

The most dangerous time of a land transaction is the time between paying for the land and getting the land registered.

If you have the oportunity to do that transaction with a bank or court - why risk doing it with a private citizen.

Another thing to consider is, the court will have already done the dirty work of evicting the debtor.

I wouldn't want to get mixed up in that mess unless absolutely necessary.

No I take the view that doing business with banks and courts is far better than doing business with individuals.

The system worked very well for us and I would be happy to use it again.

[RAZZELL]

Very informative posts GH...thanks

[Moonfruit]

Indeed GH, thanks for taking the time.

Thats one of the most informative posts ive read.

Regards

[Nawtilus]

GH, how long ago was all of this with your riverfront block ?

I am keen to also buy a river front block, but have very certain requirements for it and would be interested to know where your land is and how much riverfront was ?

[GuestHouse]

^

We bought our land around three years ago, almost four.

But as I said above, the market has picked up and developers are snapping up any plots that have 'mini moo barn' potential.

I think you'd be extremely fortunate to find a large river front property near a town these days, or at least if you did you'll be paying top dollar to get it.

That is not to say such land is not available, simply there is a lot less of it about at reasonable prices.

One thing to watch out for, with river fronts often comes flooding, if you do buy near a river do a full survey and talk to the neighbours to find out what the flood history is, then factor in that such things are changing for the worse.

Sorry but I'm not prepared to say where we bought or how much we paid.

Edited October 17, 2006 by GuestHouse

[BKK90210]

Just adding to the above... Most thai banks offer both....For Sale and Auction dept.

I have been lurking through their websites(in Thai only) for many months now, the key here is patience until you found what you want. The properties will be in mostly thai neighbourhoods and somewhat run down condition.

If you go for the auction route, make sure you have a deposit of 50000-200000 bths ready. Some bank will reguired you about 50000 bth, some will go higher with your bid application. Some will except bid application anytime up to the auction date, some will accept only every Friday up to the auction date. If you won, then they want you to be ready with the remaining cash within 1-30 days. I think Bangkok bank is 15 days, Siam commercial bank is around 7 days - unless they've changed it again.

Be sure before you go online, make sure you have the area map including districts and their sub-districts ready. Because normally both will be listed on the address with the accompanied street map and it can be confusing at times.

Good luck

Edited October 18, 2006 by BKK90210

[Nawtilus]

GH, no problem.

We looked a t a block on the river Kwai at Kanchanaburi, 700k a rai on the river just a little out of town. But did not like this one in particular.

Problem I have is I want something specific and I also need close to an international school, no more than 30 minutes drive for the kids.

[GuestHouse]

Another consideration with river fronts is to assertain if you actually own the river frontage itself. It is not unusual that the strip of land right next to the river is not included in the title deed.

Watch out for bends in the river within your boundary, these often give rise to erosion and I would always do a thorough inspection of the bank to see if there are signs of mud slide.

Then there is the real scurge of river land to watch out for.

Gravel Companies, we're making an offer on a piece of land right next to us, just to make sure that no gravel company comes there in the future.

A small chance I realize, but I really hate gravel companies.