Repossessed houses are homes that have been repossessed or seized by a bank or lender after the original owner had defaulted a finance arrangement or mortgage. The moment the property is repossessed by the lender, they’ll be looking to sell it as quickly as possible so that they can recoup the amount that they had loaned to the defaulting owner. The process of repossessing a property is also referred to as foreclosure. If you’re a person who’s looking for a home to purchase for yourself or to buy and resell, these houses may be a great opportunity for you to either get your dream home or do business.
Are Repossessed Houses More Expensive or Cheaper?
The intention of the bank or lender is always to shift the property as quickly as they can. However, the question of whether or not these houses are cheaper or more expensive often boils down to the approach taken by the lender to resell them. Legally, they have the obligation to ask for the best price they can for the property so that the interests of the previous owner can be served. This notwithstanding, the lender usually barely does anything in the efforts to make the house ready for resale.
For this reason, the repossessed houses are often cheaper than the rates of the market since they’re offered immediately for resale. The price for which these lenders seek for the property is around 30 per cent cheaper than the price that would be asked for it if it was a private sale.
Are There Downsides Associated with Buying Repossessed Houses?
Since these houses had been occupied by the previous owner for some time, the chances that they’ll require serious renovation or TLC are very high. This is fairly understandable since the houses aren’t new ones but had been in use by someone else. So, whereas the price may be substantially lower, the amount you may need for carrying out TLC may prove rather costly. Commonly, the previous owners hand over the keys but after stripping out all fittings and fixtures that were in the house. This makes refurbishment a necessary thing for those who go for the repossessed houses. So, if you intend to buy such a home, it’s necessary that you factor in the costs of doing the refurbishment in the overall cost for which it’s to be bought.
How to Select the Right Repossessed House to Buy
Just like carrying out research and investigating homes on the open market for sale, the process involves checking out and finding a repossessed house. It’s of great importance to do enough background checks and research so as to avoid any unpleasant surprises that may come up down the line. The key pointers to look for include getting a mortgage agreement, understanding that if there’s a higher offer than yours, it may be accepted by the lender and you can’t do anything about it. Ensure you very thorough on your survey and ensure extra costs for the house are factored in. After you’ve moved in, keep checking your credit rating and be sure that you’re protected by the law even as you decide to buy this home.