Buying Repossession Properties and Auction Properties

Repossession Properties

Properties can be repossessed for many reasons, for example tenants who are in arrears and Buy to Let landlords who are bankrupt. Many repossession properties can be bought at a reduced price due to the seller wanting a quick sale because the longer a property is vacant the more money the owner will be losing. However, buying a repossessed property does not mean that you are getting a bargain, many repossessed properties are in poor condition and often need to be refurbished due to being unlived in and being stripped of all fixtures and fittings.

When buying a repossessed property you will also need to take into consideration the following:

● It will not be taken off the market even after your offer has been accepted, and so the sale can fall through should the lender be offered a higher price. This is a financial risk as this could happen even after you have paid legal and surveyor fees.
● Surveying the property thoroughly is important to identify any defects and to assess how much you will need to spend on the property.
● Once you own the property check your post and contact any debt collectors to make them aware that you now own the property and the previous owners/tenants have moved.
● If previous tenants have not paid their energy bills, it is likely that their supply has been cut and possibly even disconnected and so you will need to contact energy companies to determine who the previous supplier was to get reconnected.

Auction Properties

Unlike buying repossessed properties, properties bought at auction have very little risk of falling through at the last minute, because as soon as the hammer falls, a sale is agreed. It is important to do your research before attending an auction so that you have a clear understanding of what property you want to buy and how much properties are worth before you make a bid. Many buyers are attracted to auction properties due to the very low guide prices, however a high percentage of auction properties sell for more than the guide price. You also need to make sure you have the funds in place to ensure that you can afford the property along with the other following costs:

● Deposit on the day – 28 days for completion
● Administration fees to the auction house
● Legal fees – to a Solicitor or Licensed Conveyancer
● Stamp Duty Land Tax (SDLT) - see glossary for SDLT definition
● Survey fees
● Repairs, refurbishment and renovation fees

 
 


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