For citizens and foreign nationals considering real estate investments in the Dominican Republic, buying a foreclosed property can provide significant savings over a traditional purchase. However, buying a foreclosure presents certain challenges as well. While the Dominican Republic’s legal system has evolved substantially in recent times, navigating the complex laws involved in foreclosure transactions requires expertise in this complicated field.
If you are thinking about buying a foreclosed property in the Dominical Republic, here are some important considerations to keep in mind:
Buying a Foreclosure: The Pros
1. More Options Are on the Table
By including foreclosed properties in your search, you have more options on the table. Depending on your price point and your list of “must-haves,” you may be able to consider properties in locations that would otherwise be outside your budget. Although the Dominican Republic’s economy has been growing steadily, there are still a number of foreclosure opportunities available.
2. The Potential for Significant Savings
One of the primary benefits of purchasing a foreclosure is the opportunity to buy below market value. Banks and other financial institutions lose money when they hold foreclosed properties, and they will typically sell at a discount in order to offload assets they do not want in their portfolios.
3. The Potential for Significant Returns
The potential for a good deal also means that there is the potential for a significant return on investment. While foreclosures will often need work (see our list of “cons” below), with a smart purchase and a willingness to perform any needed restorations, buyers who invest in foreclosures can often realize substantial returns.
Buying a Foreclosure: The Cons
1. Limited Negotiating Power
When a bank sells a foreclosure, it makes decisions based on numbers – and numbers alone. While a seller who has been waiting months to find a buyer or who is anxious to move may be more motivated to negotiate a deal (which may include closing costs, repairs and other concessions), banks typically set a price that has little (if any) room for negotiation.
2. Lack of Information
When buying a foreclosure, you must often make your purchasing decision quickly and with limited information. You will not necessarily know about any issues that may exist with the property because foreclosures are generally sold “as is.” Major issues that go undisclosed during the buying process could end up eating away at the savings achieved by buying on the foreclosure market.
3. A Competitive Cash Market
Finally, due to the fact that foreclosures have such great investment potential, there will often be significant competition for desirable properties. Experienced real estate investors will know how (and when) to act quickly, and they will usually bring cash to the table. As a result, other potential buyers will typically need to be prepared to make cash offers as well.
Experienced Real Estate Lawyers in the Dominican Republic
If you are preparing to make a real estate investment in the Dominical Republic, the attorneys at The Del Carpio Office can guide you through the process. To schedule a consultation with one of our experienced lawyers, please contact us online today.