Things To Be Aware Of When Buying Repossessed Properties
If you’ve ever wondered if a repossessed property can make a good investment, here are 3 important points to be mindful of before you make a purchase!
Beware of gazumping
Always keep in mind that the primary goal of lenders is to sell a repossessed property for the highest price possible. As a result, they’ll do everything in their power to get the best price that buyers are willing to offer.
One common strategy that lenders use to achieve this goal is to hire multiple agents for one house. Offers may be made to any of the lender’s agents and you can’t ask any of these agents which among the offers are favoured by the lender.
The bidding doesn’t end even when the lender has already accepted your offer. Lenders also publish a 7-day notice on the local newspaper which includes a description and address of the house for sale as well as an invitation to bid for other interested buyers.
“It isn’t over until it’s over.” Keep this lyric in mind when vying for repossessed properties because the lenders still have the choice to reject your offer even at the day of the exchange. If another buyer presents a higher offer on the agreed date, then it’s very likely that you’ll lose the cheap property for sale; unless you give a higher counter offer to the lender.
It’s not easy for the previous owners to hear that they are being evicted out of their homes. Thus, it’s very common to find repossessed properties in some sort of disrepair. In the minds of these previous occupants, they’re able to get back at their lender if they leave the house in a big mess.
When I was starting out, I chanced upon an ad in the newspaper for a repossessed property which was being offered at around £20,000 below market value. I thought that the ad was too good to be true when I read it, so I decided to check out the cheap house for sale.
Although there were no major issues with the structure of the house, I discovered that the bathroom fixtures, boilers, copper piping, and copper wiring were all removed!
Another common problem with repossessed properties is that most of them are already disconnected from their utilities provider at the time of the sale. It’s not just the gas or water, sometimes even power is cut-off.
What makes this situation messy is that the lender doesn’t usually know the utilities providers of the previous occupant. You can try to sort out the confusion on your own, but believe me that it will take a lot of time and patience to accomplish.
Granted, not all repossessed properties are as problematic as the examples above. So if you are careful in selecting the properties you bid for, then it is possible to end up with a good investment. Just don’t make hasty decisions based simply on the advertised BMV price tag.