If you can put aside the emotive mental images conjured up by the words 'repossessed property', then there are some real bargains to be had. You just need to know where to look and how to go about buying.
A repossessed property is a home that has been seized by a lender after the previous owner defaulted on a mortgage or other finance arrangement. Once a lender has taken ownership of a property, they will seek to sell it quickly in order to recoup the money loaned to the previous owner.
It's natural to feel a little squeamish, but it's also important to remember that the picture is not as black and white as it may seem. For one thing, simply repossessing a property does not automatically clear the previous owner's debts. The proceeds of any sale will go towards clearing the debt - so, as unpleasant as it may seem, actually selling the property is an important step towards financial recovery for the previous owner.
It is also important to remember that not all repossessed properties come on the market after families fall behind on mortgage payments. Many are new builds and flats which are taken over by lenders when property developers fall on hard times.
In short, the history of these properties is not necessarily a reason to pass up an opportunity to pick up a bargain.
This comes down to the way lenders approach their sale. That is, whilst they are legally obliged to seek the 'best possible price' in order to serve the interests of the previous owner, they will rarely do anything to prepare the property for sale. Lenders want to shift repossessed properties quickly, so will usually price them below the market rate and offer them for sale immediately. As a result, repossessed properties often sell for up to 30% less than might be expected through a private sale.
It is likely that properties offered for sale after repossession will require some serous TLC. It is not uncommon for previous occupants to strip out all fixtures and fittings before handing over the keys, so some refurbishment is likely to be necessary. It is important to factor the costs of this work into the overall cost of buying the home.
The favourite hunting ground for property investors is the property auction. However, auctioneering is a skill in itself: read our guide, How to buy a property at auction. Auction sites offering repossessed houses for sale include:
In addition, the recession and related rise in repossessions has seen a number of specialist websites spring up. These include:
You can use these sites to search for repossessed properties in your area, and sign up for alerts as new properties become available.
Finally, it is worth keeping an eye on the local papers and making contact with estate agents. Estate agents may well sell repossessed properties, but not advertise them, so drop in or call to ask what is available.
The process of finding and checking out a repossessed property is really no different to investigating a home for sale on the open market. It is vital that you do your research to make sure there are no nasty surprises down the line. Here are some key pointers:
hi, just looking for some advice. We put an offer in on a repossessed house, we had all finances in place and we don't need to sell another house. However, our offer was rejected for a much lower offer, £15000 less, as they were cash buyers. I thought they had to, by law, try get as much as possible for the house. Is this right, is there anything that we can do?
ahh for shame, your post has been up for awhile... my point is... pray tell, why on earth you though someone would give you advice on here ?
Not really, The bank has a duty to treat the lender fairly and so s/he must balance the best price with the speed of sale/ likelihood of completion. A mortgage offer may sometimes not complete due to circumstances beyond your control. In any event, the cause of action would exist for the benefit of the previous owner, who is protected by the FCA, not you.
Here is how you find another repossession quickly
Be the first to find out about the hottest bargains, biggest freebies & best deals each week! Terms & Conditions