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Posted on 2nd Mar, 2022

Buying repossessed property – What you need to know


Below is some initial guidance for buying a repossessed property. Remember to keep an eye out for the blog section of our website for the latest, useful information.

Regular 30% discounts

Mortgage lenders want their repossessed house sold quickly, so will often price them well below market rate.

You can compare the price of the property on to the average similar property price in the area, by looking at the section at the bottom of the property listing. Screenshot below.

You can find further information about average prices using this Zoopla tool


Act quickly

As banks are legally obliged to achieve the highest price possible for the property they have repossessed, they continue advertise the property despite accepting an offer on it, in the hope of achieving a higher bid. If a higher bid is made, this can leave the initial bidder out of pocket on legal and conveyancing fees. This is known as Gazumping.

Considering this, if you are buying a repossession it’s vital to move fast until the contracts are signed.

When buying a repossessed property, time is very much of the essence. Act fast, with confidence and with a sound understanding of your investment strategy. This will avoid the risk of Gazumping. Premium properties typically have no existing offers on, giving you the best chance to secure a below market value property without entering a bidding war and incurring unnecessary fees.


Inspect the house

It is important to consider the level of care that previous tenants took within the property before they were evicted. It is often common for repossessed properties to be somewhat neglected as tenants unfortunately fall into financial troubles. Such things to look out for include damaged fixtures and fitting being removed or damaged.

Always remember that the government or any lender may not fix up the house after foreclosure. The house you’re getting might either be in perfect condition or slightly run-down.

Do a thorough inspection, calculate estimated repair costs and include them in the price of the house to understand how good of a deal you will be getting. We recommend visiting a potential investment property several times, crucially with a solicitor or surveyor. As these properties have no onward chain, there is no previous tenant to pass on any helpful tips about any minor defaults in the property, this will be down to you. However, run-down nature of repossessions is why many choose to invest in them as they provide incredible potential to add value in the short term.


Do your research and be cautious

Repossessions are not always as great as they seem. You may see a property that is listed at heavily discounted prices, often reaching 30% below market value but quickly snapping them up without fully analysing them can be dangerous.

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. However, being as well informed on a property as possible, limits possible bad surprises down the line.


Save some cash for later

The downside is these properties often need a refurb. At best, they might feel a bit unlived-in. At worst, the previous owner could have stripped out all fixtures and fittings before leaving.

Repossessed homes can come with a significant amount of property development. Whether it’s the structure, plumbing, interiors or exteriors it always helps to have some cash saved up for such expenses.

As long as these factors are considered into your budget, repossessed properties give you the ability to tailor the property exactly to your needs and the tenants that you may want to let to. This freedom is hard to find within other property investment avenues.

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