Buying a Repossessed Property
But do you know the risks that come with this opportunity?
On the positive side, you may bag a bargain. Lenders often put these types of houses and flats on the market to get as much return as quickly as they can when, for example, the original owner of a property has defaulted on paying the mortgage on it and all other avenues have failed. They might be prepared to accept as much as 30% less than the property’s open market value.
On the negative side, you'll never know why the property was foreclosed on - it may be that the seller simply couldn't sell on the open market because the property had:
'Caveat emptor’ to the extreme – with added time pressure
All properties in the UK are sold caveat emptor, i.e. let the buyer beware, it’s at your own risk and your responsibility to check out the quality of your purchase. This becomes even more extreme with a repossessed property, because, as you've seen above, there may be a number of issues as to why it’s being sold at a discount.
This is why it is important to never cut corners and 'walk the path' that a buyer getting a mortgage would need to take, asking all the same questions and turning over all the same stones.
A good majority of repossession purchases are bought without getting a mortgage, which means that you could quite literally ignore all warning signs and buy the property as is. The challenge here is if you buy a property, ignoring a legal issue that later means you are unable to sell the property to someone who is getting a mortgage. You'll be faced with the issue of having to drop the property price or left with costly legal bills trying to fix the issue.
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Check for structural issues This is critical; having a professional RICS surveyor inspect and report on the property is the best way to find out if the property has or might have any major issues such as subsidence, damp, rot, Japanese Knotweed or asbestos. The ensuing report most importantly might help you decide whether you’re trying to buy a bargain…or a ‘ringer’.
You should allow at least 1 week for booking a surveyor because it is normally more of a challenge to book one more quickly as they will probably have prior bookings. Once the RICS surveyor has carried out the inspection, it will take up to 1 week before you receive your survey.
Need a surveyor to inspect and report on a repossessed property? Call us for a speedy turnaround and unbeatable rates – 0333 344 3234 or click for a free RICS home buyers survey quote.
Book your lender’s mortgage valuation ASAP
Be prepared for vendors suddenly withdrawing acceptances of offers
In all, buying a property a bank has foreclosed on can prove a roller coaster of an experience: risk is prominent but rewards may be great. If you choose to go down this road, it pays to be as fully prepared as you can be, absorb as much information as you can uncover and to respond as quickly as possible when you have a task to complete.