Buying a repossessed property can be a great opportunity to secure a bargain, but there are many things to bear in mind. You need to ensure you do your research, so here are some of the things we suggest you consider before you begin your search -:
Repossessed properties can go very cheap because the seller, which is usually a bank or developer, wants to secure a timely sale. Whilst the house remains empty, they are losing money. So when a bank or building society claims back a house, it is their responsibility and in their interests to get as much as they can for the property. Most sellers will spend time making improvements to the property and then wait for the right offer whereas banks will more likely price them cheaply to sell quickly.
Typically, houses become repossessed because borrowers couldn't make the mortgage payments. But there are other new-build properties previously owned by developers and buy-to-letters who have been impacted by the economy and sadly, couldn't make their payments. It's still very important to be exactly clear on what you are buying however as some repossessed properties will require a great deal of work which will mean significant investment after the purchase.
Repossessed properties can usually be bought for anything between 10% to 30% off the typical market value. How much will depend on the work that needs doing in order to get them into a liveable state. So, the bigger the discount, the more investment required on the work. It used to be the case that properties were sold at even bigger reductions but buyers are increasingly going to auctions to buy, so the savings they make are slightly less. However, those willing to put in the time and work to do up substandard properties can still find themselves a good bargain. Additionally, there is usually no chain involved so sometimes you can have access to the property in only a few days.
This mainly applies to those tempted to buy incredibly run down properties just because they are cheap. You might get stung when you realise how much you need to invest getting them up to standard. Ideally you should make sure you view the property a few times with a surveyor and even a solicitor. You might see repossessed properties for sale for under £20,000, but there could be some hidden horrors which will end up costing you a fortune to rectify! This is a particularly important point to remember with repossessions - hidden issues are sometimes the reason that the seller wasn’t able to sell the property themselves before it was repossessed, so always be careful.