Repossessed Houses For Sale

Image showing repossessed houses for sale in the UK

Repossessed Houses For Sale

The current state of the economy means that the number of repossessed properties in the UK is on the rise. During the last quarter of 2019 the number of homeowners who had their house repossessed rose by 17% compared to the same period of 2018. For buy-to-let owners the figure was even higher at 20%. This trend shows no sign of declining in 2020 meaning that potential buyers have a large choice of repossessed houses for sale.

Repossessed houses for sale in the UK are often priced more competitively as the onus is on the vendor to achieve a fast sale and recoup what they are owed. For any buyer who already has the money in place buying a repossessed house can give you a real bargain.

Where Can I Find Repossessed Houses For Sale?

Many of the repossessed houses for sale in the UK are offered by mortgage companies and banks. If a loan has gone into default and the property owner cannot keep up repayments, the lender will take over the title of the house and sell it to cover the amount owed. It is not always simple to find repossessed houses for sale but as a general rule lenders will sell properties through estate agents, auctions or Local Property Administrator receivers.

Auctions are a favourite place to search for repossessed houses and there are specialist websites devoted to this kind of property sale. It is also worthwhile asking at local estate agents as sometimes these types of properties are not openly advertised.

Are Repossessed Houses Always A Bargain?

Repossessed houses are often cheaper than those advertised conventionally. Lenders who have taken possession of a property are obliged to get the best possible outcome from the sale. They are unlikely to make any renovations to make the property more attractive so will set a price that is below the current market value. You may find a repossessed house for sale at around 30% below those advertised as private sales.

Repossessed Houses FAQ

Why Are Repossessed Houses Cheaper?

The price of a repossessed house can be up to 30% below market value because lenders want to quickly recoup their losses whilst getting the best price for the previous owner. This often means that the property is unlikely to have had any redecoration or renovation to prepare it for sale. This reduces the value compared to houses sold on the open market.

How Long Does It Take To Buy A Repossessed House?

There are strict time limits when you are buying a repossessed house whether at auction or through a bank or estate agent. An offer may be accepted and if there are no complications the contract will be exchanged and completed within 28 days. Until completion there is no certainty that the property is yours as a higher offer may be placed and accepted by the vendor.

How Can I Know If A House Is Repossessed?

A house that has been repossessed may have a bank repossession order or notice of recovery placed in a prominent place such as inside a window. It may also have stickers on the appliances that state 'do not use'. You can check with the land registry to see if there is a current mortgage. If you are searching at auction websites you will see the wording 'by order of the receiver' or 'by order of the mortgagee'. You can also check with the vendors simply by asking a direct question.

Image showing a repossessed house in Stockton
Houses are repossessed for many different reasons, with loan default being a main cause in the UK. Photo © Ian S (cc-by-sa/2.0)

Can I Get A Mortgage On A Repossessed House?

A loan on a repossessed house is assessed in the same way as any other property loan. Consult a mortgage broker if you do not have a current lender. A property loan is granted if the lender is confident that the value of the property is the same as the asking price. Getting a mortgage agreement in principle will give you some idea of how much you can afford when searching for a repossessed house for sale.

You could also make enquiries about a mortgage for a second home if you are buying a repossessed property for that reason. This type of mortgage cannot be used to buy a property which you intend to rent out.

How Are Repossessed Houses Sold?

As the vendor wants the best possible price, repossessed houses are often sold through a bidding process. Even if you have paid for a search and survey there is still the chance of being gazumped if someone comes along with a better offer. However, it is important to note that a full structural survey is still important when buying any property so do not skimp on this essential outgoing.

Different Types Of Repossessed Houses For Sale

There are two different types of repossessed houses for sale in the UK. The first is property that has been repossessed by the bank and which has been put up for auction or is for sale through an estate agent. The second type are private property sales where the owner cannot keep up with payments and has decided to try and sell the house before the bank or mortgage company takes it over.

Buying a Repossessed House At Auction

Buying a repossessed house at auction is no riskier than buying through an estate agent. You need to carry out the same checks and with thorough searches into the title deeds, review the conditions of sale and organise a full survey. Never go above your budget and don’t bid too early. Go to a few property auctions in advance so that you fully understand the procedures and exactly how the houses are sold at auction.

Take time to find out why the house was repossessed and which companies or official bodies have a charge against the property. If you do not get a survey there is no recourse from the vendor should any problems arise. It is crucial to look at all the factors before buying a repossessed house including transport links to the location and what amenities are available close by.

Image showing a repossessed home
You can save a considerable amount of money buying a repossessed house and some are in very good condition. Photo © Des Blenkinsopp (cc-by-sa/2.0)

How Much Can I Save Buying A Repossessed House?

You can usually save a considerable amount if you buy a repossessed house. Most sell for well below the market value so you could save as much as 30%. However, many factors will influence the price of a property. Location and good infrastructure make some properties far more popular than others.

A property that is purchased for anywhere between 20% and 30% below market value can be a excellent bargain. However, the caveat here is that you may need to spend some money on renovating the property and redecoration. It is entirely possible that the previous owner will have stripped out everything possible including light fittings. Be prepared to factor in extra funds to make the house habitable.

Are There Downsides To Buying A Repossessed House?

The first downside that you might encounter is being gazumped. Lenders are always going to put their own interests first and will take the best possible offer right up to the last minute. There is also a short 28 day deadline for exchange of contracts and completion. Some repossessed houses will have no utilities connected and there could be outstanding bills from the previous owner which need to be paid before connection is restored.

You may find that there is a lack of detailed knowledge about the property. Check for clauses in the contract and make sure to examine the property before completion to ensure that everything is as it should be. Finally, there could be adverse damage to your reputation if the previous owner had significant debts. Check your credit rating before taking ownership so that any changes after the sale can be rectified with the credit agencies.

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