There are many benefits to buying a repossessed property, mainly due to the fact that lenders typically want to get rid of them as soon as possible in order to avoid losing more money. Lenders typically offer repossessed property with a considerable discount, often up to 30% of the original value of the property. This is a great opportunity for those who have limited funds to secure a property that might have otherwise been out of reach.

If you have come across a repossessed property that you wish to purchase, you will need to act quickly - it is likely that the lender may plan to take the property to auction and will be open to offers, so the property will be likely to be bought up quickly. However, do not rush in as you should approach the buying process with the same caution you would with any property purchase. There are many pitfalls buyers can fall into if they rush into the purchase of a repossessed house, such as missing out on even more savings, buying a property they come to regret or finding a better option later down the line.

To help you avoid such pitfalls and ensure that the property is one you want to own, and to help you secure it quickly, the expert conveyancing solicitors at JMW Solicitors have written this guide on how to purchase a repossessed property and what you will need to consider when doing so.

What is a repossessed property? Why are properties repossessed?

When a homeowner stops paying their mortgage due to being unable to finish their payments, the mortgage lender is likely to repossess the house. In many cases, this can lead to financial loss for the mortgage lender, so they will try to sell the property quickly in order to limit their expenses. While they may sell the property for a lower value, they will avoid losing money over time. Waiting for a better deal to come along is risky as the property may decrease further in value and the mortgage lender will find it more difficult to sell a property at a higher value.

Where can I find repossessed properties to buy?

Often, estate agents do not deal with repossessed properties - if they do, the estate agents often do not advertise them. This is because estate agents typically prioritise their high-value properties as they are more lucrative. The best places to find repossessed properties for sale are at property auctions or from specialist repossessed property dealers. To find these, you should search for auction houses or dealers in the area that you wish to buy property.

With that in mind, it is still possible to find repossessed houses from estate agents. Banks or other mortgage lenders may choose to go with an estate agent to improve their chances of getting a higher sale value. Get in touch with local estate agents to find out whether they are selling any repossessed properties.

Is it difficult to purchase a repossessed property?

While repossessed properties are more affordable, the difficulty in securing one lies in doing so quickly, as they are highly desired for their price and can go quickly at auctions. This bidding process can be intimidating and it can be difficult to know what strategy to approach it with.

You will also need to be prepared to deal with any missing appliances or gas and electric fixtures that the previous owner may be responsible for removing. Purchasing a repossessed house can mean making improvements to bring the house up to a good, livable quality. This work can cost you money where the house purchase saved it, so you should only enter a deal to buy a repossessed house if you are confident that any additional costs will not be too expensive. At an auction house, you may be shown images and videos of the property, but if you are able to view it in person, you should do this.

The silver lining of purchasing a repossessed property, even if you then have to spend more on repairs, is that you may prefer to cover these expenses yourself, rather than through gradual repayments in a mortgage agreement. A property that is worth more will incur a higher mortgage value. Even if you have the funds available, you may struggle to qualify for a higher mortgage. However, if you can purchase a property at a lower mortgage rate, you will then be able to use your additional finances to carry out any work that needs doing.

You may also find that the property has been disconnected from the utility providers. In some cases, this will be a simple fix and the providers will reconnect you for free. However, in some cases, the utility providers may charge you an extra fee, and you may have to provide evidence that the house is being lived in again.

Once you have bought the house, the bailiffs may visit with the goal of removing the previous owner from the house - they may not have been made aware that the house was repossessed and now has a new owner. You will also have to explain to them that you are the new owner of the property and you may have to provide documentation to prove it.

What is the process of buying a repossessed house?

Purchasing a repossessed property is very similar to how you would purchase one normally, however, there are a few extra considerations you should make. Firstly, if you purchase the house through a property auction, you will be expected to put down a 10% deposit and will then have to make the full payment within a month. You will also require a conveyancing solicitor to organise the legal documentation necessary to fill out before you can legally own the property. This documentation may vary depending on the state of the house or the circumstances under which you bought it. This something that those looking to buy repossessed property will need to consider - you should speak to a conveyancing solicitor to understand what these differences are, as they may vary between each situation. In addition, you will require a survey to be carried out to ensure the property meets UK regulations. This is a standard part of any house-buying process, repossessed or not.

The process of purchasing a repossessed property is much quicker than buying a house through typical means - you could own the property within a month of winning it at an auction. However, this means you must act swiftly to ensure that everything is in order before you move in. To do so, you should speak to a conveyancing solicitor from JMW as soon as possible. Our team will assess your situation and work with you to ensure you are getting a good deal and can officiate all of the paperwork required.

To have one of our legal professionals look over your prospective new property now, call us on 0345 872 6666, or fill out an online enquiry form and we will return your call at a time convenient for you.

For more information on how we can help you, visit our Repossessed Property Conveyancing page.