Currently, repossession properties make up 20% of all homes sold at auction. This figure is constantly rising due to the financial crisis in the UK. Banks and lenders are now moving even more quickly when it comes to repossessed houses and are looking to sell them on their first day listed at auction. What does this mean for potential buyers? low prices. The banks and lenders will be willing to sell low in order to force a quick sale and recoup funds.
Property auctions are the best place to buy repossessed homes, but it’s important to know what you are doing and not end up paying over the odds. Below we have added some quick tips to Repossessed Homes UK so that you can hopefully pick up a bargain repossessed property.
1. Do Research
- Make sure you know the area you are buying in.
- If buying to let then know the rental market.
- If the area has Universities or hospitals nearby then finding tenants will be easier.
- Check the market rate in the area especially on the same street.
2. Auction Trial Run
- Visit Property Auctions as a test and familiarise yourself with the process.
- Watch how others bid.
- Obtain Auction Catalogues from auctioneers.
- If interested in a particular property see if there are other documents available from the auctioneers.
3. Visit The Property
- Make a visit to the property, don’t just rely on catalogue descriptions.
- Take a builder with you if possible to get an idea of how much renovations may cost.
4. Pay for a Survey
- Surveys are essential and can ultimately save you thousands if it means you avoid buying a dud property.
5. Have a Price Limit and Stick to It
- When attending auction, have a maximum bid price in your head for a particular property and STICK TO IT. It’s easy to get carried away in repossession auctions with other bidders present but it can ultimately prove costly.
6. Arrange a Mortgage Before The Auction
- Don’t bid on a repossession property unless you are sure you can get a mortgage.
- Exchanges are done on the day of property auctions.
- You will need to complete within 20 days.
- Never apply for a mortgage after you buy at auction, if your application is rejected you risk losing your deposit.
7. Make Sure Your Deposit is ready
- Make sure you have the 10% ready to put down as deposit on your repossessed property.
- Take chequebook and identification to the auction.
8. Factor in all Costs
Remember that there will be many costs involved and don’t forget to budget accordingly.
- Survey Fees
- Deposit
- Auction Fees
- Stamp Duty
- Solicitor’s Fees
- Renovation Costs for the repossessed house
- Insurance Costs
- Future Mortgage Payments
- Other Costs
9. Calculate Taxes You May Need to Pay in the Future
10. Cover your Mortgage Payments
- If buying to rent the property out, it is not certain that you will get a tenant on the first day, or if there is renovation you will have to wait for a tenant. During this time the mortgage will still need to be paid so factor this in also. We advise to have at least 3 months payments in reserve.
Visit Repossessed Homes UK to find further free information on property repossession or buying repossessed homes.
