One man’s misery is another man’s opportunity to bag a bargain. And, as the number of properties repossessed by mortgage lenders rises, savvy buyers are snapping up unbeatable deals.
The latest figures from UK Finance, the banking trade body, reveals that the number of homeowner properties taken into possession in the final quarter of last year rose 17 per cent on the same period in 2018.
This was accompanied by a 20 per cent jump in the number of buy-to-let properties repossessed.
As the number of properties repossessed by mortgage lenders rises, savvy buyers are snapping up unbeatable deals
This is still a relatively small number overall (1,990 properties) and remains far below the levels of repossessions seen in the years following the financial crash, but numbers have been creeping up.
Bruce Burkitt, founder of property development and acquisitions firm Property Experts, says one perk of buying a repossessed property is that you are dealing with a ‘motivated seller’, aware the property has to be sold and, therefore, more willing to negotiate on price.
‘Pricing is likely to be more realistic from the start because a quick sale is required.’
Barry Abbott saw first-hand the potential to land a great deal when he bought a repossessed Victorian townhouse on Southend seafront for £290,000, about £100,000 under market value.
The property was offered on a closed bidding process, where interested parties had to make secret bids. The winning bidder would then need to be able to complete within 28 days.
Abbott says: ‘As long as you go into it with the funding in place, and you’ve done your sums, then you can get a good deal.’
So how do you find a repossessed property? Lenders who take a property into possession will often put it on the market with a local estate agent.
James Hogan, an estate agent with Yopa, says that while an agent won’t generally advertise that the property has been repossessed, there may be clues in the listing.
‘The properties will usually be empty, with air fresheners on the windowsills. Sometimes curtains are tied up — and a good indication is the price is normally far lower than the street’s value.’
Burkitt says that because buyers associate repossessed properties with being a bargain, they often attract a lot of interest, which can push the price up.
He suggests introducing yourself to local estate agents, so that you are in the forefront of their minds when a repossession case comes up.
He adds: ‘It’s also best to get to know agents who aren’t part of a multi-branch network agency, without heavy online exposure, as you’ll face less competition.’
If the estate agent fails to sell the property, the lender may turn to a dedicated property auction.
Spotting a repossessed property is easier in these cases.
Auctioneers publish a catalogue of the lots in advance of the auction itself, and will highlight which properties are repossessions.
It’s recommended that you book a viewing in advance, while some interested parties also get their solicitors to check the legal pack, which is available before the day of the auction itself.
If you make the winning bid, then you will need to pay a 10 per cent deposit on the day, with the rest of the money due within 28 days.
The need to be able to move swiftly in order to complete on the purchase of a repossessed property, whether through an estate agent or at auction, means that they often appeal to cash buyers.
But Hogan argues they can still be an option for aspiring homeowners, too.
‘I have sold lots of repossession properties to first-time buyers, but they have to have everything in place when they make an offer, such as deposit, mortgage and solicitors.’
On the market: Up for auction