Repossessed homes: Bargain buy or financial trap?

With property prices rising across South Africa, repossessed homes are often marketed as bargain opportunities for eager buyers.

But according to Rowan Terry from TPN Credit Bureau, the reality is far more complex.

Speaking to Clarence Ford on CapeTalk, he says they can be a great way to get on the property ladder.

"Repossessed properties are a very accessible way to enter into the property market."

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But Terry cautions that what looks like a good deal on paper can quickly become an expensive lesson.

“Any distressed properties are sold voetstoots,” he explains.

"Voetstoots basically means the property is bought as is."

But, warns Terry, if a property has been repossessed due to non-payment of a home loan, the chances are that the defaulting owner has also not maintained the home.

That leaves little room for recourse if structural issues, plumbing failures, or electrical faults are discovered after transfer, he says.

"So when you buy voetstoots, it's very important to look at the physical condition or state of those properties."

While repossessed homes can offer opportunity, buyers who fail to look beyond the sticker price may find the bargain comes at a much higher cost, warns Terry.

"There needs to be a lot of homework behind the scenes to understand if it's going to be a good investment."

To listen to Terry in conversation with CapeTalk's Clarence Ford, use the audio player below: