You don’t just invest money in a home – it’s a place where you invest memories. Every nook and cranny of your house would have a story to narrate. With so many emotions and sentiments involved, it only makes sense that you spend your money carefully when buying a home – especially a repossessed house:
They are a profitable investment since you get to purchase the property at a bargain price. The seller is usually a mortgage lender or bank looking to get as much as they can, and as quickly as they can, for the property. And who doesn’t like a good bargain! You can negotiate it for a low price, renovate it, and probably sell it back at a higher rate. Or, use it to set up your dream house.
Not all properties facing foreclosure are run –down. Some are new- builds, especially flats from developers who have recently declared bankruptcy. But such homes are few and far between. Most homes in the market are facing foreclosure because arrears haven’t been paid for quite some time. Some may have abandoned the house. Such houses usually tend to be in an appalling condition. The house needs immediate repairs – you may have to redo the property. Repair costs can go up to thousands of pounds. And at the end of the project, you may have spent more than you could afford.
You probably thought buying a repossessed property is a walk in the park, and that you are the only person interested in buying the house. Ha! You’ll have to be prepared to face a gazillion real estate investors ready to pay by cash. If you are a first time owner who’ll need a mortgage to finance your house, make sure you are quick. Speak to your bank if they can provide a pre-approval letter. It specifies that the lender has approved a specified amount. The letter is not a guarantee, but merely a qualifier.
As we earlier said, repossessed properties are often in disrepair. The owners couldn’t possibly afford to spend on repairs, they have removed the fixtures and fittings, or worse, leave it full of junk. Never skip a survey – it is crucial that you physically evaluate the property. Take a professional with you to help with estimating the repairs.
This is especially true if you are a first-time buyer. Banks are obligated to get the highest possible price for the foreclosed property. They may try and pass on some of their costs by surprising you with structural engineer’s fee, legal fee, etc. Consult a lawyer to sort out the legalities involved and ensure that you have complete ownership of the property.
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