In this article, you’ll find the most common ways in how to buy a repossessed house in the UK. We’ll provide guides and tips for investors in order for you to be able to buy repossessed properties safely and securely.
The two most common routes to buy a repossessed house in the UK are via estate agents or at auctions. Both methods are used by lenders to sell these properties as quickly as possible and each require a different, careful buying strategy. Getting the strategy right can secure you a property up to 30% below market value. So, what’s the difference?
From auction
Just like the auctions you’re used to; people will bid for properties either in-person or online if you register in advance. If you do decide to attend an auction, here’s some tips you should consider:
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- Research the property you want to bid on. Typically, properties up for sale are advertised beforehand. That gives you the opportunity to arrange a viewing in-person to ensure that you definitely want to put in a bid. We wouldn’t advise that you bid on a repossessed property without looking into it properly. That includes reading through legal documents and having a structural survey conducted to ensure there are no unexpected issues which could arise, causing you additional financial trouble later down the line. Unlike with a traditional sale, the owner isn’t there to point out any problems with the property so the responsibility lies with you to find them.
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- Check your credit report. Before you start bidding, download your credit report to make sure that there are no issues that could hinder or even block your application. This also allows you to remove and inaccuracies or outdated information prior to bidding.
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- Prepare your finances. You should plan the maximum amount you’re willing to bid whilst either having the funds ready in the bank or have an agreement in principle (AIP) in place. An AIP is a document from your lender indicating an estimate of the size of the loan they’re willing to offer. Mortgage brokers are able to guide you through the AIP process in order to get a confirmation swiftly.
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- Make your bid. If you’re successful by being the highest bidder, you must pay 10% of the agreed price straight away on day of auction. Once completed, both the seller and buyer are committed to the sale, which is expected to be finalised within 28 days. The remaining 90% is paid within this window.
Estate agents
Buying repossessed properties via estate agents used to be difficult to find as they tend not to advertise that they are in fact repossessions. These days are made more simple though, see below for our tips in buying repossessed properties via an estate agent:
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- Use Repossessedhousesforsale.com. We are here to provide a platform for you to be able to search through new repossessed properties added every day, saving you considerable time, cost and stress in, an otherwise difficult market to navigate.
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- Arrange a viewing. As mentioned above, have a structural survey done and do your research on things like noise in the area, any issues with neighbours or planning permission problems you could run into should you want to buy the property.
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- Make an offer. Once completed, you’re ready to then make a firm offer on any property you now want to buy.
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- Contact a solicitor to complete the process. They’ll do a series of checks to make sure there are no issues with purchasing the property.
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- Complete the sale. When contracts are exchanged, you are legally committed into buying the property. This then leads to a legal completion of the transaction and the property becomes yours, giving you the keys to your new property.
When it comes to deciding which route to go down, a broker with experience in getting mortgages for repossessed properties can advise you on both and help you decide which is the best option for you when buying a repossessed property in the UK.
