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What you need to know about buying a repossessed property

home with sold sign

It’s a sad fact that during the recession over the past few years a large number of homeowners have faced having their property being repossessed as they struggle to keep up with their mortgage payments.

Meanwhile, many would-be homebuyers have not seen the huge drop in house prices they had hoped for, and as a result are still struggling to raise the funds to buy a home.

Although there have been introductions of other schemes such as Help to Buy to get the market moving,  could repossessed properties be an opportunity for first-time buyers to get on the property ladder?

Repossessed property: should you buy one?

Houses are repossessed for a variety of reasons. It could be that a homeowner has fallen too far into arrears, and their circumstances are not turning around. It could be that a developer or buy-to-let landlord is facing bankruptcy.

Although repossessions are regrettable, you shouldn’t be worried that you’re cashing in on the previous residents’ misery.

By supplying the cash for the sale of their old home, you’re actually helping to repay the majority of their debt.

Why are repossessed homes discounted, and by how much?

Estate agents may discount a property when they’re looking for a quick sale. On top of this, repossessed homes are often not in the most desirable condition so are more likely to sell for less than similar properties.

Although the homes will always be valued realistically,  estate agents are often willing to accept offers below market price in order to attract cash buyers who can move quickly, if you’re really lucky you could knock the price down by 10-30%, however this isn’t always the case.  In some circumstances, repossessed properties are in demand, and you may need to pay the full market value in order to beat off the competition.

Before deciding what to offer on a property, your first challenge is to find one in the area you want to live.

Finding a repossessed property

Although buying a repossessed property could mean you find a home for less than the typical market value, it’s not as simple as snapping up a bargain in the January sales.

If you’re a first-time buyer, you’ll likely be up against developers and landlords with cash to invest. They often have relationships with estate agents that enable them be the first to hear about bargains.

Firstly, its a good idea to get on first-name terms with estate agents in the area you wish to buy. Try to visit agents during the week, where you’ve a reasonable chance of meeting the manager, not the casual Saturday staff.  Remember to include those agents with a tie to a particular bank or building society, as these agencies will be the main outlet for those lender’s homes.

Never skip the small ads at back of property section in your local paper although these days you’re more likely to find information online.  One such website is www.whitehotproperty.co.uk where you’ll find discounted or incentivised properties.

Another source is property auction houses, although take care – at auction you’re likely to be rubbing shoulders with some real professionals.

Found a bargain? How to make your move

If repossessed property is for you, be prepared to move quickly — and moving quickly means having the money ready.

There’s usually no chain involved; you may be able to buy and complete within a week. It may sound like a bit of a rush, but it’s wise to move this fast, otherwise you could be beaten to your bargain by a better offer.

Finding a mortgage

Nearly every first time buyer needs a mortgage. However to an agent, this could mean uncertainty and delays.

Start by speaking to a mortgage adviser, so you know just how much you can borrow and whether there are any obstacles that are likely to stand in your way.

If possible try and get a decision in principle (a DIP) from a mortgage lender, which will whet your estate agent’s appetite. A DIP is not quite as good as cash, but it’s the next best thing: it shows them that you’re serious, have done your homework and have access to funds.

Speak to an adviser

Our trained expert advisers have access to the UK’s leading lenders and using their knowledge and skills will place you with the most suitable leader and product for your needs.

01244 950 307

The property

Many repossessed homes enter the market in a distressed state. Repairs may not have been carried out, fixtures and fittings could have been removed, and you’ll need to know if extra investment will be required.

Although you’ll want to move quickly, you should never just buy a property on a whim, particularly if it is in a state of disrepair.  Don’t skip getting a survey done which should reveal any hidden defects – for an older, delapidated property it may be worth spending the extra money to have a full structural survey done.  These can be expensive, but could save you a lot of money and hard work in the long run.
You may also want a builder to view the property with you to give estimates for the work as you go.

Another vital check to make is if the property you’re looking at is currently a rental property, make sure there’s no tenant in situ as this may cause complications along the line.

One final property-viewing tip: never smile or seem too delighted at the prospect of your bargain. Agents are experts at spotting any telltale signs that could lead to you making a higher offer when pushed.

Repossession bargains: what do you think?

Do you have experience of buying a repossessed property? Are you a first time buyer with lots more questions up your sleeve? Or have you been on the other side of a repossession and want to tell your side of the story? Please leave your comments below.

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The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media or the Mitchell Farrar Group.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

22 thoughts on “What you need to know about buying a repossessed property

  1. m.jivanjee says:

    i would be interested in findiing a reposseed property, in n.w.london

  2. Chris Jones says:

    There are certainly bargains to be had out there. Just be prepared for the endless letters and calls from debt collectors etc. 15 months later I’m still getting threatening letters (intended for the previous occupant) despite responding to every one of them and explaining the situation.

  3. Harriet says:

    Repossessions are definitely a good deal – if you bag a looked after house. I have purchased one for half the original asking price. Having owned the house for 1 year, I’m already looking at a £35000 return, and that’s without the rent i’m receiving!

  4. baz says:

    bought a flat that had been repossessed, although badly neglected by tenants, only needed less than £1k to bring it to a very good standard…..bargain! flat next door cost me £17k more just3 months earlier!

  5. Kasim says:

    I bagged 2 repossessed properties: one for £71,500 and another for £59,000 both 3 bed terraced houses with a drive. However, I spent £12,000 on the first and £6000 on the second. The first rented out within 24 hours of my agent advertising it; the second is still being refurbished but hope to rent it out in mid-April.

    The first property had an electrical fault – all the power sockets were on one ring including the electric cooker. I paid £1600 to have the house rewired and replace 2 appliances which burnt out.

    The law requires a gas safety certificate but not an electrical one. It’s obvious that electricity is dangerous: why doesn’t the law take that into account? I may be suffering from paying too much maintenance but the £32,000 further advance on the first property more than paid for it and set me up to buy another property.

    I’m looking forward to £24,000 further advance on my second property to buy a fourth property. Hopefully, the cycle will continue until I have bought the maximum of 9 properties which lenders allow in the current climate.

  6. ray says:

    i bought a repossed property as i was told that if you find such a property that they could only charge what was oowing on it to recover their debt and was told to give them seven days notice on the price i was willing to go to using a seven day notice and to my amazement it worked after seven days nobody beat my offer so i was in to the agent on the seventh day they let me have the house and saved a fortune was worth a try

  7. Rebecca says:

    Hi

    Can you please tell me how / where i can find repossessed properties?

  8. kiran says:

    Hi

    Can you please tell me how / where i can find repossessed properties?

  9. arradea says:

    Hi,

    As above, How and where to find repossessed properties?

  10. Bill Warren says:

    It is a shame that more wasnt made within the article of the availability of Sale and Rent Back providers and products who can often prevent repossession and enable the family/borrowers to remain in their homes,protecting jobs and children’s schooling. Sale and Rent Back business is a highly regulated market helping many individuals and families to maintain a less humilitatiing and stressful life.

  11. Avril Foster says:

    The difficulty appears to be in finding repossed properties in my area of North Essex. I have subscribed to receive brochures listing houses coming up at auction but there appear to be very few properties in this area. I think they must be snapped up before coming onto the open market or going to auction. Any tips for finding a repossesed property ?

  12. Dystrom says:

    First things to point out is that 10%-30% under market value comment in the report is extremely misleading, and in fact very wrong! I work for a corporate estate agents and the property are priced correctly, following our own appraisal and a fully bonded RICS surveyor has visited – so the price would never be that much below supposed market value – they will ALWAYS be price accurately following correct research. If you think you will definately get a bargain, then will rarely be the case. They are a good purchase as you know it HAS to be sold, no messing about/delays, no vendor pulling out, a survey has already been done, as you should be dealing with a reputable agent – repo companies only deal with well vetted local agents. There are a lot of hoops to go thru – the property stays on the market until exchange of contracts – no exceptions! – if an agent says its off they are misleading you and their client – it will never happen. So therefore there is the risk involved but move forward quickly and get the purchase well progressed and the repo company are far less likely to consider similar offers unless hugely higher upon which they will be obliged to do so. There are other points to cover so do speak to the local and sound out the exact process so you dont get disappointed or feel mislead at any point.

  13. mich says:

    Are there any sites that specialise in properties that need up-dating and redecorating but are not in the auction market?

  14. Simone Robreto says:

    to all the folks looking for advice on

    [quote]how /where to find repossessed properties
    [/quote]

    it seems the article is saying they’re scarce and you have to be on good terms with an estate agent to be notified. Also that you can view them in small ads and through Property Secrets.

    The simple fact is that most of them go word of mouth to developers and landlords.

    However I would like to add another way: crawl the neighbourhood. My husband & I recently saw a house with rubbish outside. A note in the window said if anyone needs to remove things from the property please ring this number. We rang the number and hey presto, a repo. Buying at 30k under market value although will need 10-12k spend. Eyes open is the answer.

  15. Keith says:

    My recent experience is a lender that wasted loads of time even though I was a cash buyer. after initially taking more than 2 weeks to accept my first offer back in November, various going’s on meant the offer had to be revised twice (each which took a further 2 weeks to accept) … in February, we were 3 days away from Exchange & Completion, when the lender pulled the contract from my solicitor. As for the report above saying you could get a deal in as little as 7 days … I only wish !! And as for the Estate Agent above saying that properties remain on the market … yes technically they do, but you get some very obstructive practices from agents not wanting to disrupt a agreed sale, such as not being able to find the keys, or forgetting they had an appointment to view – I’ve had both in the last couple of months – or there’s the story of the furniture clearance firm who had lost the keys and now another set needed to be sourced, meanwhile the other sale-agreed, progresses.

    Perhaps it’s that ‘close relationship’ with the estate agent that’s key – seems it’s more about who you know in this game.

  16. A Smith says:

    I bought my first home in 1999. It was a repo and had been advertised in the local paper. I paid £8k less than it had originally been sold for new ten years previously. It only needed cosmetic repairs so spent the bare minimum on it. I sold it making £106k profit less than 6 years later. To find auctioneers in your area don’t subscribe to websites watch Homes under the Hammer. Most of the auction house featured have web sites. Also look at http://www.ourproperty.co.uk. This is the land registries web site. You get to see how much other houses in the street went for and the last recorded sale price for the house your buying. Good luck!

  17. As a chartered building surveyor (FRICS) with over 45 years experience within the building industry together with being an expert witness for the Courts now for over 20 years, I can only recommend people to get an ‘independent’ surveyor or ‘independent’ practice to undertake their professional work and where the surveyor is in his or her forties or more. The reason why I advise this is because professional negligence cases usually involve young qualified surveyors or professional people in my experience still learning their trade, as we all have to do. Therefore it is not the size of the chartered consultancy/practice that you employ but down to who undertakes the professional works for you and to whether you get an excellent service or not. In this respect I have known many cases over the last few decades where qualified surveyors have undertaken reports and where they have left out substantial elements. As one example of these to indicate what can happen, a survey in the Pontefract area where I was asked to undertake a second opinion. This second opinion found that the first surveyor had overlooked nearly £14,000 of remedial building works that needed undertaking. If this had not been identified the unsuspecting purchaser would have had to foot the bill for this or fight the matter through the Courts (expensive and time consuming). As it was the buyer had the asking price reduced by the near £14,000.

    Indeed, when an estate agent or financial institution specifies a chartered surveyor or engineer there is usually a commercial tie somewhere between the two. With this you do not get an independent assessment in the true sense of the words (through possibly being economically with the truth) as estate agents in particular are basically just looking for a sale. With that, compromise may occur down the line.

    My recommendation is therefore always to get someone yourself and where then you will know 100% that there are no ties at all and no possible vested-interests lurking in the background. The surveys and chartered reports will also be much cheaper as the possibility of commission is also eliminated totally. Common-sense really.

    Dr David Hill
    Huddersfield, West Yorkshire

  18. Gemma says:

    Just wondering if you can help me…. do you know anything about repossessed properties ?? and if any under handed things go on with estate agents I’m dealing with reeds rains and nothing seems to add up??

  19. Heather says:

    Hi Gemma, sorry to hear you’ve been having problems with a property and the estate agent. I don’t know the full details of your situation but it may be worth speaking to your solicitor for further advice.

  20. becky houlihan says:

    I’ve just had an offer accepted on a repossession. The property was priced at 155K and houses sell for 185K upwards on the same street. The bank I am getting my mortgage with have been into the property and have valued it as nil. Should I get a surveyor and carry on or call it quits now?

  21. james smith says:

    Hi,
    I,ve just bought a repossession , can anyone tell me am I liable for any of the previous occupants debt also as the gas & electricity has been cut off will I have any problems or cost to get re connected , any advice would be most welcome .

    Regards James

  22. kehinde Adeniji says:

    sorry guys, we bought and moved to a repossessed house and most their properties are still there including car. are we also the owner of the properties?. thks

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