Thinking about buying a repossessed property?
Houses are repossessed for a variety of unfortunate and regrettable reasons. It could be that a homeowner has fallen too far into arrears, and their circumstances are not turning around. It could be that a developer, or buy-to-let landlord, is facing bankruptcy. Repossession often signals a coming to a close of a particular set of circumstances that have been ongoing for a long period of time for the person, or people, affected. Buying a repossessed property for sale Belfast can present a compelling opportunity for an investor or homebuyer. Pinpoint Property are approved Estate Agents NI for several asset management companies (acting on behalf of the repossessor) and sell a number of repossessed properties.
Finding a repossessed property
Estate Agents are not allowed to market a property as a repossession and are asked by their client (the asset management company) to refer to them as a 'corporate sale'. Small ads in the property section of a local paper is a good way to identify those which may be repossessed. When looking through properties online, looking at the photographs can also often be a good indicator e.g. fixtures and fittings removed, tape over taps and utilities. You can see all properties listed with us via our Pinpoint Property Search facility.
The price, set by the repossessor, is based upon the recommendations of two or three estate agents. The properties will always be valued realistically, take into account its condition, location and comparable sales within a recent time period. Estate agents may discount a valuation if their client is looking for a quick sale but asset mananagers will rarely consider a low offer on a property in the first few weeks of marketing.
Inspect the property
Arrange a viewing through the estate agent. Ask a builder or someone experienced in redevelopment to view the property with you to give estimates for the work. If you are viewing the purchase as an investor you need to make sure that the figures stack up. If you are subject to mortgage make sure the mortgage lender will fund the purchase of a property where, for example, the heating may have been ripped out or where there may be no block management contract in place.
Place an offer
Before you offer you need to be aware that you will only have a maximum of 28 days to complete on the property, less if you are a cash buyer. Estate agents are required to qualify offers before reporting them to the asset managers for their clients consideration. This means you must provide proof to the estate agent that you have the funds to back up your offer. Examples of proof can be a bank statement or mortgage promise from your mortgage lender or confirmation from your accountant. A low offer on a repossession property newly marketed property is rarely accepted, but may if it has been on the market for several weeks.
If your offer is accepted be prepared to move quickly. Appoint a solicitor experienced in conveyancing repossession sales who will proactively push things forward as fast as possible. There’s usually no chain involved in a repossession sale and, if you are in a cash position, you may be able to buy and complete within a week. It may sound like a bit of a rush, but it’s wise to move this fast, otherwise you could be beaten to your bargain by a better offer.
If you’re a first-time buyer and subject to mortgage, you’ll likely be up against developers and landlords with cash to invest. If an investor, you are looking to make a profit and there is a ceiling to what you can pay and still retain a realistic chance of achieving this. As such investors may well be competing against potential owner occupiers for whom profit is not the key motivator and who are likely prepared to pay more.
Keeping in mind the banks obligation to get the best price for the property, they will insist that estate agents continue to fully market the property - even after they have accepted your offer. This means you can be gazumped at any time up to exchange of contracts, losing survey fees, structural engineer fees, and legal fees in the process. While there is risk involved, preparation and being able to move forward quickly and get the purchase well progressed means that the repossession company are somewhat less likely to consider other offers, unless significantly higher, upon which they will be obliged to do so.
One of the major differences between conveyancing of repossessed property and an ordinary purchase is that the seller will be unable to give any information about the property. On a normal purchase the buyer’s Conveyancing Solicitor will expect to get information on matters which the seller would know about because they have occupied the property – for example, whether any alterations have been carried out, or whether the property has suffered from flooding. Clearly a bank will not have this sort of information available. As in all property purchases, the basic rule is ‘caveat emptor’ or ‘buyer beware’ – in other words, buyer must look out for themselves.