Second Hand Homes Suit Consumers With A Limited Budget

28 Apr 2017

Second-hand homes are one of the property types classified as a nonperforming asset (NPA). An NPA is a property seized by the bank when the borrower does not repay the loan for over 90 days. The property is then sold to an asset management company through an auction, who subsequently sells it to consumers through either another auction or a general purchase.

There were 46,358 second-hand homes transferred to consumers in the first 9 months of last year out of the total of 134,319 residential properties transferred during this time, according to the Real Estate Information Center (REIC). The total value of the second-hand homes transferred in the same period was THB 107.98 billion. The total value residential properties’ transfer during this time was THB 327.42 billion.

Meanwhile, Sukhumvit Asset Management states that the level of nonperforming home loans has shifted higher. Nonperforming loans account for 3 to 4 per cent of all loans in the overall bank system. And nonperforming assets with a combined value of THB 60-70 billion were brought to sale at auctions last year.

Last year, in addition to higher rejection rates, nonperforming loans increased significantly as a lot of buyers failed to finish paying off home loans. This is partly a consequence of the low down payment requirements from developers with some not collecting any sort of down payment at all. The absence of a down payment made the monthly payments higher and, therefore, difficult for buyers to keep paying.

This year will see more nonperforming assets sold by financial institutions and asset management companies, due to the new Land and Building Tax that will be enforced in 2018. These assets, however, will see prices fall due to a greater number of supplies available in the market for consumers to choose from. Nonperforming assets this year will include a great number of second-hand homes, which are ideal for those consumers with a limited budget who are seeking a home. Second-hand homes are less expensive than a new house, but there are some concerns that you need to consider before buying one. Here is a checklist to see if the second-hand home you’re looking at is worth buying.

Second hand home checklist infographic ENG

 

Among the 5 points in the above infographic, conducting a house inspection in person is the most important. You need to check throughout the house including the electrical system, water system, furniture, ceiling, and house structure. Impairments in any part of the house will incur maintenance costs, which can add up. You might even find the total cost to eventually be higher than purchasing a new house.

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