Thinking of buying a repossessed property? Read this first!
David Boyd, Managing Director, PAD4U Estate and Letting Agents Manchester writes:
Buying a repossessed property can present a compelling opportunity. Repossessed properties are usually priced competitively compared to similar non-repossessed properties. PAD4U partners with many of the banks (via Asset Management Companies) and sells a number of repossessed properties. However, the process of buying a repossessed property is different than a normal property sale, which can catch buyers unaware and potentially cause upset for the prospective buyer.
The major difference in the buying process is the increased likelihood of Gazumping. The banks have an obligation to get the best price they can for the property in the open market on behalf of the previous owners. The banks must be seen to be making all efforts to get the best price within the market. This obligation results in the following points to keep in mind when buying a repossessed property:
- Repossessed properties are often dual listed by two Agents in the area. Offers may be made to either Agent, and you will not be privy to the offer amount, if there is another offer on the property via the other Agent (neither for that matter will *your* Agent so there is no point asking!).
- If you decide to place an offer for the property, you will need to provide sufficient proof that you have the funds available (inc. any Mortgages Agreements In Principle and proof of deposit funds), so have all of this information ready as your offer will not be put forward without it.
- Even if your offer is accepted, the property is likely to be advertised on a 7 day notice within a local newspaper stating the property address and current offer on the property. The advert will *invite* other offers.
- Right up to the date of exchange, if a higher offer is received (and proof of funds have been provided) the Bank can accept a better offer on the property. By this time you may well have paid monies for surveyors or solicitors. But regardless, unless you increase your offer you will probably lose the property to the higher bidder.
This can be very frustrating for the buyer, but is less so if you are ready and prepared and understand the reasoning behind such decisions. The rewards of this frustration however, can be great, but only you can decide if the rewards are great enough.