Pros and Cons of Buying a Foreclosed Property

• 13 March 2021
• Local News
• 2558 Views

Most investors are reluctant to buy foreclosed property as they do not want to deal with complicated court procedures despite the low price. However, buying a foreclosed property is not always complicated if you know how to analyze the property and follow the procedure well.

A foreclosed property is a property that the original owner used as collateral to secure the loan but was later forced to sell by the court after the owner defaults their debt.

Given so, the price of that property is lower than the market price, which is a great opportunity for investors to grab and resell it for a higher profit.

However, buyers should analyze the potential of the property thoroughly. For example, if the property is a land plot, one should study whether or not it is in a great location? Can it be sold at a higher price in the future? However, if it is a house, buyers must check the condition before purchasing.

President of the Cambodia Real Estate Association (CREA) Kheang Puthy said that buying the foreclosed property is an opportunity, but investors should consider other factors such as geographical factors, ownership document clarification (hard title or soft title), the population density of where the property located, infrastructure, and most importantly your business plan on what do with that property.

Nevertheless, though buyers can successfully buy the property legally. There are also some hidden risks, especially in the Cambodia context.

According to a real estate lawyer who asked not to be named, the most common problem is that the former owner refuses to leave the property even after the purchase and ownership transfer.

Sometimes the former owner can cause troubles as they disagree with the court decision. This is the most common issue that foreclosed property buyers have been experiencing.

In addition, in rare cases, the former owner disagrees with the court decision and appeal the case, which can also cause complications for buyers as well.

Overall, given both pros and cons, buyers must study carefully before making a decision. You can either end up having a big profit if you can quickly sell it out or end up dealing with complications if you don’t know the property well.

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