There are plenty of repossessed house for sale web sites that offer house repossession properties on the housing market but – how do you go about buying one?
The following guide explains how to go about locating repossessed homes for sale – without having to first pay up front to get your hands on a list of potential properties. We also provide information relating to the pros and cons of buying such properties – as well as how to buy them.
Repossessed Houses – Why They’re So Cheap
In a nutshell – repossessed houses are generally sold off at anything from 10 to 30% less than their market value. The reason for this is related as much to the banks or mortgage lenders need to off-load the property as it is to anything else.
Banks don’t need the houses that they repossess – and they’re not in the rental accommodation market either so the most effective way of recouping as much as they can is to knock down the price and go for a quick sale.
Buying Repossessed Houses – What Are The Benefits?
If you’re considering buying a previously repossessed house, you need to take into account what the benefits are. Beyond the obvious – they’re often sold at less than their market value – what else is in it for the prospective buyer?
For one they’re a great investment opportunity. If you manage to buy one at a knockdown price, refurbish it at cost or for as little as possible – you can either turn it back around for a quick sale (bearing in mind the current market) – or simply rent it out.
The rental market is on the rise – the costs relating to house repossessions is heavy on those losing their homes. On top of that there’s:
- a steady stream of eager students looking to rent
- young adults that aren’t ready to hit the property ladder (or can’t)
- the fact that social housing can’t house everyone that registers with them (due to a lack of available properties)
- a steady influx of migrants entering the country
All of above add up to a healthy array of potential tenants – virtually guaranteeing private landlords a steady future income.
Alternatively you could just be looking to buy a home that you want to live in. Buying at auction is a great way to realise a dream that may have previously been out of reach.
The Disadvantages Of Buying Repossessed Houses
Of course there are always disadvantages to anything and buying repossessed houses is no different. Many of the repossessed homes listed as auction properties will need refurbishing – many to a heavy degree.
Some home owners are known to completely strip their homes bare prior to handing over the keys to bailiffs – and we’re talking everything. Light fittings, kitchen fixtures, wooden floors – pretty much anything that is or isn’t nailed down.
That can leave the new owner with a whole lot more than just a bit of new decorating.
Beyond that – due to legal wrangling, a home may have also lapsed into a poor state of repair. Houses that have been left for long periods of time can become incredibly neglected and need a lot more than just a little TLC to put right all the wrongs.
On the up-side – if you’re open to some hard work, then the above needn’t put you off. Arm yourself with all the information available about a prospective property. Contact a local builder, obtain some realistic quotes. Make sure you’re aware of not just what you can see – but also what you can’t see.
One big problem with buying auction property is this: often times buyers don’t go in with their eyes wide open. It’s still not unknown for an individual to just buy a property straight of the back of the auction document – which is never a good idea.
Once you’ve bought a repossessed house – it’s yours. You inherit all its potential, as well as all its problems. Remember – work smart, especially if you’re considering parting with a considerable sum of money.
How To Buy Repossessed Houses For Sale
Once you’ve located a potential auction property – how do you buy repossessed houses? Assuming that you’re a first time auction buyer – its worth (at this point) to recommend a couple of info rich books that will detail all you need to know – from needle to thread.
The books are best sellers and clearly define the do’s and don’ts of buying at auction.
The first is written by Howard Goodie – Buying Bargains at Property Auctions. The book is written from the perspective of a buyer that has no previous knowledge of how the auction property market works.
It’s packed full of relevant information, clearly set out and the author is a long standing member of the auction house community. Worth investing in purely because the knowledge you’ll gain will stand you in good stead – and it’s the only book you’ll need related to buying at auction.
Property Magic 2010: How to Buy Property Using Other People’s Time, Money and Experience
The second is written by Simon Zutshi – Property Magic 2010: How to Buy Property Using Other People’s Time, Money and Experience. Again the book’s author is an expert in the field of property investing. It’s written in language that will appeal to the layman – there’s a distinct lack of useless verbiage and space-filling narration.
Tight, info rich and useful to first time investors.
Beyond reading up on how to buy repossessed houses at auction – here’s a breakdown of the more pertinent information. This is written based on the assumption that you’ve located a potential property.
Position yourself financially. Before you go into the buying process make sure that you have the cash flow to back you up. On the day you’ll be expected to pay a 10% deposit. The remaining 90% must be paid within 28 days.
Read up on the legalities. As a rule, auction houses provide what’s known as a legal pack with every property. They provide this for a reason – it’s designed to fully lay out all the covenants, anything that’s related to the legalities of conveyance that prospective buyers have a right to know.
Read it – and if you’re unsure take it to your appointed legal representative as a means of double checking. Don’t wait until it’s too late to find your potential new neighbour has a right to light over your property or can restrict your future development plans.
Compare the market. What are other comparable properties selling for in the local area? What are the rental prices, what’s the rental market like (in case your intention is to rent the property) in general?
Auction houses often set lower guide prices as a means of tempting prospective bidders/buyers. Make sure you’re aware of the true market value to save yourself making an expensive mistake all round.
Get ready for the auction date. Arrive early – property auctions can be busy environments and it’s unlikely you’re the only one interested in buying repossessed houses for sale. Turning up in a timely manner will allow you the time to register (which requires that you bring personal identification) and to hopefully find a seat.
Make sure you have enough money with you – often the biggest blunder of the day.
How to bid on repossessed houses. You bid in the same manner as you would on any auction property – make sure that the auctioneer can see you, that you can see him (or her). Be clear that you’re bidding – raise your hand or property papers. When you’re out – clearly indicate with a firm shake of your head.
Set yourself a target – and be strict. It’s too easy to go over what you’re prepared to pay so set yourself an upper limit – and stick to it. If the property you wanted doesn’t meet its reserve – approach the auctioneer after the auction is over.
They’re permitted to act as a representative and can mediate between you and the vendor. It’s not unknown for a vendor to agree to a sale despite their reserve not being met – you may well find yourself surprised at the vendors positive reaction to your offer.
How To Find Repossessed House Auctions
Some vendors have simply chosen the auction route as a means of selling their home – they may need to relocate, or move abroad and selling at auction (if successful) is known to be a faster route to selling your home.
That said – whether or not the inof is freely available doesn’t mean it’s all that easy to track down. A good number of property auction houses only release their sales list of housing professionals.
Generally these are the guys that expect you to pay them for the privilege of sharing what they know. In the event that you don’t want to pay – a little extra leg work will help you locate what’s on offer – and when.
A good way if identifying repossessed houses in your local or desired area if to do a sweep around the locale. Anytime you see a for sale sign on a property you’d be interested in, check on the for sale board to see if the property is up at auction – you’ll find the auction house details.
Repossessed Houses For Sale – Property Auction Links
The following websites are all property auction related – whether they’re auction houses or connected to the industry. All you have to do is have a look at each one and sift through to pinpoint the information that you require.
Wheres My Property – a great source of current info and one of the UK’s best property search engines
Up My Street – lots of information relating to house prices, local area info, local amenities and trends.
Country Wide Property Auctions – as the name suggests free repossessed houses for sale and general auction property website. To ensure up-to-date listings you just need to join their mailing list or request catalogs.
Property Earth – similar to the above – join the mailing list to receive current listings.
Whitehot Property – again a property auction and general houses for sale website.
UK Auction Guides – a wealth of information relation to upcoming auctions and auction houses
Allsops – property auction website, full of info regarding houses for sale and post-sale info.
Must Be Sold – same as the above. Lots to go at with this one.
Right Move – a broad spectrum houses for sale website but definitely worth a look. It’s not difficult to pinpoint auction property.
The above are all worth the time it will take you to trawl through. There is a lot on information across the different sites and it’s all relevant to the purchase of repossessed house and auction property in general.
The last piece of advice offered is this:
Caveat Emptor – let the buyer beware.
Do your home work, inform yourself of what it is you’re buying/getting into. Buying up previously repossessed homes can be very lucrative – providing you fully understand the ins and outs, the guidelines and legalities.