What are Properties in Possesion (PIPs) ?

The term PIP is used in the industry to denote homes that are possessed by the bank which owns the bond for the property.

When a homeowner goes through a sale in execution through the courts, the bank may protect its outstanding bond and thus bid and buy the property into its possession at the no reserve judicial auction. Once it owns the property it will attempt to unload the property at, or near its assessed value.

When no one is willing to purchase the home at the sale in execution (which is frequent, since these sales achieve such weak prices on stringent terms) the bank seeks to sell it through the market.

Taking advantage of PIPs on the open market is about obtaining a home on the market versus the auction and obtaining possible discounts in price.

You can find PIPs through estate agents and auctioneers, but the best place to look is in dedicated PIP websites such as MyRoof.com. These listings are made available by these web sites and contain descriptions of these properties in suburbs across South Africa, along with suggested prices.

The main advantage of finding PIPs is buying homes at discounts, says Rael Levitt, CEO of Auction Alliance.

In a perfect world, a bank will prefer to sell the home at its current assessed market value. In a depressed market - or a buyer's market - Pips are usually well below the assessed value.

Another major benefit is that there is no transfer fee payable when purchasing a repossessed house which presents a significant saving for the buyer, although bond registration and the usual attorney fees still do apply.

Auction Alliance Press Release

Posted at 08:09AM Dec 02, 2011 by Editor in Auctions  |