You can buy a repossessed property at 10 to 15 per cent below market value. Lenders that are making repossessions need to make a quick sale to recover the money they have loaned, so they're willing to accept a lower offer on the property. And some repossessed houses are in such a poor state of repair that they're offered more cheaply than other similar homes which are presented in a better condition.
But, to obtain a property bargain, you may face stiff competition from property developers and investors, who may adopt rather questionable practices when they're obtaining repossessed houses, such as paying finder's fees to estate agents. So what are the best ways to beat the competition and obtain that bargain repossession?
Catherine Dawson, author of How to Buy a Repossessed Property Bargain, reveals her top tips to how you can beat the competition and bag a property repossession bargain:
1. Get to know your local selling agents.
Adopt tricks used by property developers and investors and try to get to know agents and build up a network of contacts. Visit agents on a regular basis and meet the staff, individually, to encourage them to tell you about that repossessed property bargain first. You will find that some members of staff will be more helpful than others, so visit the agents at different times so that you can get to know everyone who works in the office.
Register with a number of selling agents online and ask them to email repossessed property details as soon as they appear on the market. Often you can receive information about a repossessed property before the details are published, printed and displayed in windows. Only use reputable agents and make sure that they are a member of a suitable redress scheme so that you can make a complaint if you feel they have acted unethically or unlawfully.
Find out the tricks of beating property developers here.
2. Obtain a list of all the auctioneers in your area and register on their mailing list.
This will enable you to receive catalogues for all forthcoming auctions, as soon as they are published. These catalogues are very useful to your research and will help you to keep abreast of fluctuations in the market and help you to spot repossessed property bargains when they come up for auction. ‘By order of the mortgagee’ or ‘on behalf of mortgagees in possession’ are the types of terms to look out for when you’re spotting a repossession at auction.
Find out more on how to buy a property bargain at auction here.
3. Know how to spot a repossession.
Most estate agents won't indicate that a property is a repossession when they initially market a repossessed property for sale. To spot a repossession , look out for the following:
4. Try to be flexible about the type and location of the repossessed property.
All types and sizes of property can be offered as repossessions and if you are very flexible about location and type, you will have the opportunity to find out about a wider variety of repossessed houses.
5. Make sure that you act rapidly and that you can move quickly on the purchase.
This will be harder to do if you are part of a chain and you have not found a buyer for your house. Check that your solicitor or conveyancer can deal with the paperwork as quickly as possible. Remember to include information with your bid that illustrates that you can move quickly and that you are a serious buyer.
6. Understand how much the repossessed property is worth and try to make a guess about how much others will offer.
This is of particular importance if the repossession is to be sold through a sealed or open bidding procedure. Speak to the estate agent and conduct a detailed price analysis to help you to know how much to bid. Also, try to find out more about the condition of the repossessed property before making your bid, as this will have an influence on the amount you offer. Ask builders or surveyors to look around the property and provide estimates for work. It is preferable to offer an odd amount, such as £150,001, as this will enable you to beat other people who have offered £150,000, for example. Also, remember to include the phrase ‘subject to contract and without prejudice’ on any written bid that you make, as this will help to protect you against problems that could arise before the exchange of contracts.
Published on: September 30, 2008