Mortgages for Buying an Apartment or House from a Receiver
Unfortunately, in recent years, as a result of the recession, there has been a significant increase in a market called “buying apartments or houses from a receiver”. Estimates speak of an average of 1,000 to 2,000 homes going into receivership annually. In total, almost 3,000 homes are currently undergoing this process.
The advantage of buying properties from a receiver is their alluring prices, which are about 15-25% lower than the homes’ market value. As wherever there is supply, there is also demand, many Israelis view such a transaction with a receiver as a true opportunity. In addition to the low price, buying from a receiver is also considered to be a safe transaction, both in terms of registration and title, and as far as the buyer being protected from any third party. In most cases, this is a quick transaction requiring decisiveness.
However, the buying process is not simple, and requires various authorizations from the competent authorities – for the procedure itself, for taxing aspects (capital gains tax, municipal taxes, sales tax), and for funding.
As early as submitting the bid (because the properties are sold in a sort of auction), the potential buyer is required to provide the receiver with 10% of the cost through the use of a cashier’s check or bank guarantee. The money is paid back only if someone else wins the tender. This means backing out from the transaction will involve losing these 10%, and the potential buyer must be prepared financially (funding can be approved by a mortgage bank or insurance company) as early as this.
As in any other instance of buying a property and taking a loan for the funding, objective professionals who specialize in mortgage consulting can be extremely helpful and assist in minimizing costs.