Buying A Repossessed House

[maerim]

Last year in the U.K. there were about 35 thousand evictions by the financial institutions of people who would not or could not keep up the payments. This at a time of relatively low interest rates and plenty of employment i.e. good times, wait till the bad times come.

The vast majority of these cases were uncontested in court.

These people can forget about home ownership for the next 12 years, as it is 6 years on the blacklist for a normal county court judgment but 12 years for defaulting on a mortgage.

The whole process takes about a year to 18 months from start to finish.

Now fast forward to Thailand how many repossessions here last year?

From what I can see not that many

Last year I saw an empty house on a small estate (in fact I saw thousands of empty houses last year here in Chiang Mai) a big one, detached, with a fair chunk of land with it and detached by more than 3 feet from next door.

I made some enquiries and found that it had been empty for 8 years it is structurally sound but needs a lot doing to it to make it habitable.

This is no problem to me as this is what I did in the U.K. I used to buy the worst house in the best street turn it into a “des res” then either sell it or rent it out.

So just give me the wallpaper, a box of nails and a hammer and I will have the place as right as nine pence in no time.

It also comes with a non optional extra, a load of Burmese squatters.

I am also aware of the Thai’s reluctance to buy used property with ghosts etc. I have told my family its not dead people that cause the trouble in this world but the live ones.

I have never been mugged, ripped off, cheated, and lied to by a dead person yet so the next time will be the first.

As I did not want the sellers to know a Farang was interested in the place I let the family do the negotiations, these raced along like a snail on vallium.

I had to go back the U.K. last year on business and when I returned here the negotiations were as far advanced as they were when I left.

So I decided to put my head above the parapet I went to the bank who had lent the money for the purchase in the first place 9 years ago.

The original sum was 3.5 million baht, pre the 1997 crash with the joys of compound interest this sum now stands at 7.5 million baht and no payment for over 8 years.

The bank official kept saying they would have to consult the owner re the sale of the property I did point out to him that it is very unlikely that “the owner” would walk into the bank after 8 years and say” Oops, sorry about that and here is the last 8 years of payments”

So what I can gather is that the bank has the deeds to the place but the borrower still has the title so he has nothing to lose by not handing over the title. They also said it will be at least another year before anything can be done with the house.

Now I know house prices here are a fraction of what they are in the U.K. but all things are relative so are wage rates but multiply this empty house by all the other empty ones in Thailand including the shop houses and all the other houses that have been empty for years, the last person in them was the painter and decorator.

It would seem to me that there is a crisis waiting to happen with all these non performing loans.

Any advice or tips (including taking a brown envelope full of money to the right person) would be much appreciated by others who have any experience of buying a house from a bank.

[COBBER]

The number of properties here where the buyer has defaulted on mortgage payments is quite high. As you say once in default the interest rates are very high and the amount owed to the bank can blow out dramaticly very quickly.

The bank is only interested in getting their money back ,but its a lengthy process before they can sell up the house.

The way the laws work here ,the bank cant negotiate or disclose any information with a prespective buyer, without permission from the home owner ,before theyve been through the legal process and taken possesion of the house. And usually once the bank has possesion the house is sold by public tender so that they can get the best possible price.

What you can do if you know a house is in default, is go to the bank with the home owner and agree to buy the house for whatever is owing and then make an incentive payment to the home owner. This way the homeowner at least comes out of it with something ,wheras if the bank sells them up they will get nothing.

I have seen houses bought well below market value by doing it this way.

[lampard10]

I was waiting for something important to come along for my 500th post,so here goes:

Be very careful in this sort of situation,because in some cases the court holds the deeds,especially if the cause of the missed payments is a divorce or something unlawful. That happened to us initially but after weeks of wrangling the court turned the papers over to the bank.The fact that we had friends high up in the bank that was dealing with it might have helped a tad. We were in fact a hairs breadth away from calling the whole deal off,but as the said property was going for a song we stuck with it. Just be very careful and try to get as much other advice as possible.

[aletta]

The magic number you need to find out is what the bank has the house on it's books at,ie the size of the outstanding loan.

It will be very tough to get them to sell below that number as they would have to realise a loss.Give the loan clerk a "drink" to find out how much.

[COBBER]

When the bank starts the legal proceedings for the sell up phase a process server goes to the house with documents and if the house is vacant they pin it to the front gate. This has the amount owing to the bank on it . If you approach a bank enquiring to the amount of a mortgage that is in arrears they will not give any details without the consent of the homeowner unless you have contacts .

[Shola]

I let the family do the negotiations, these raced along like a snail on vallium.

<{POST_SNAPBACK}>

Sorry! Don't know anything about buying houses but that expression is the BEST ever to describe negotiations in LOS!!!

Hope you don't mind if I rip it off!

(BTW, Congrats on your landmark post Lampy!)

[COBBER]

I was waiting for something important to come along for my 500th post,so here goes:

Congrats Lampy on the milestone. Now i hope that the good natured banter between yourself and the Doc will not be restricted to bedlam.

Really good entertainment. Thank You. Enjoy reading your posts.