The home-buying process can be an enormous task, demanding large amounts of your time and money. From your initial search, negotiations, mortgage paperwork, solicitors, surveyors, home inspections and many other considerations, it can be easy to get overwhelmed if you are not prepared.
Repossessed homes can appear to be attractive real estate, and they most definitely can be, yet it is important to be cautious during the buying process.
Let’s fully look into the best way to explore repossessed houses for sale and use our services to make your home-buying endeavour more enjoyable.
What to Consider When Buying a Repossessed Home?
A few small details to consider before moving day
Book the movers
Repossessed properties come in all shapes and sizes. Contrary to popular belief, many repossessed properties provide turn-key opportunities completely ready for move in. In this instance, with a closing date in mind you should prepare your moving logistics, either hiring a professional service or renting appropriate moving vehicles.
Call the locksmith
Given that most repossessions are taken in unfavourable circumstances for the previous home owner, we would always recommend changing the locks on any property as soon as it comes into your possession. Book a locksmith as close to your move in date as possible, making it one less thing to stress about in the early days of your investment.
It can be very easy to forget essential utilities such as gas, electric and cable in the excitement of a property purchase. Make the calls to providers at least two weeks ahead of time to be safe.
When looking at the market for repossessed houses, it’s crucial not to take things as they seem. You may see a property that is listed at heavily discounted prices, often reaching up to 30% below market value.
You need to make calculated decisions to make sure that you are choosing the best property available, and quickly snapping them up without fully analysing them could be a dangerous idea.
We recommend getting a full structural survey before you close on a property. A thorough inspection of the property can help to identify any defects or potential problems that you may be facing. A basic valuation or homebuyers survey will not detect any underlying issues that a full survey may be able to spot, so it may be worth spending the extra money before you decide to buy.
Many of the renovations that make repossessions so attractive to investors are primarily cosmetic and easily fixed in short time periods. Yet, we understandably to be as well informed on a property as possible, limiting any possible surprises down the line.
It’s essential to always keep the price that you are willing to pay for the property in mind. This needs to be considered in line with things such as competition from other potential buyers as well.
It is a legal requirement for selling agents to provide a public notice of any offers made on repossessed properties. This is why the ‘off market’ repossessed property market does not exist; however, this does sometimes mean that bids can come in fast for properties you are interested in. Factoring in this possibility is essential within your financial modelling, allowing a little extra room for negotiations at the closing stage of a property deal.
When a home is listed at a low price it’s likely to attract a whole array of buyers. As this occurs, the property will likely rise in price, as the seller observes a higher level of demand and therefore competition in the market.
Most people in financial difficulties will have tried to sell the property themselves before it was repossessed by the bank. Try to find out reasons why the house may not have sold, such as being in a bad location. This could have an impact on you if you try to sell on in the future.
Consider setting yourself a price limit and/or budget, to make sure that you stay in line with your financial decision-making and that you don’t exceed the limitations that you place for yourself.
Gauge their Offer Beforehand
This advice is heavily focused on your finances, and this makes sense considering you are investing in a home. It’s important to get a mortgage offer from a lender before committing to any offers of your own. In this way, you are likely to be able to see what their limits are in prices, and you may be in a better position to negotiate your own.
If for whatever reason your offer is turned down, it is important to take a step back before making your next move. You could up your offer, but is it worth it?
Paying close to market value on a repossessed property is a risky decision, particularly if there are underlying problems that may not surface until after the sale.
If you are determined to stick within your limitations, then sometimes it’s easier to just walk away and look for an alternative property, however in some situations it may be worth waiting it out. If the property remains unsold at a later date, the bank may be willing to reconsider your original offer.
Having a clear understanding of your budget makes the buying process much simpler when purchasing a repossessed home.
Therefore, it is important to not jump the gun when considering the market for repossessed homes, as you can never be certain about what is contained within that home. This is why doing your research is extremely important to consider.
Get in touch
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