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Has anyone ever bought a repossessed house?

(36 Posts)
vintagetat Wed 03-Jun-15 16:11:03

We have put an offer in on a house we have seen, it has been repossessed and needs quite a bit of work doing. There doesn't appear to be anyone else interested in it, we went to an open house and we were the only ones there.
We are struggling with the negotiation side of it though......we made an offer, it just came back with a "no".
So, we increased our offer, again a "no".
They don't seem to be giving us any kind of indication of the figure that they would like to see which is very frustrating.
Has anyone been through this?

Sunnyshores Wed 03-Jun-15 20:20:40

I almost have several times. I assume its the bank (mortgage company) that you are dealing with as the owner? Or have they instructed a Receiver?

There is no obvious answer to what they will accept, you need to get as much info as possible. In all situations the reposessor has a legal duty to get as much as he can for the house and to prove that he has done this by fully marketing.

In some circumstances there will be an amount of mortgage debt that they need to clear, so you dont always get a bargain. Sometimes even if you have offered more than they need, they want, say 12 weeks on the market. Sometimes they wait until several people are interested and then they go to best and finals.

But in all circumstances I have found that they are very particular about who they sell to. And when they do decide, they want it done quickly and to be sure you can and will complete.

So rather than just put a verbal bid in via the estate agent, who says who knows what to them, write a letter of intent. Enclose proof of funding (your mortgage offer, your deposit), give your solicitors details, say you are committed to purchasing, would like to complete in 8 weeks or whatever, you are not in a chain....

Good Luck!

PettsWoodParadise Wed 03-Jun-15 20:53:12

We bought somewhere this way, but the bank had instructed an Estate Agent who wanted an easiyish life. First offer turned down, second offer queried but we asked them to submit it formally along with evidence of our earlier offer and it was accepted. Main requirement was to complete speedily and we agreed to a 28 day deadline which was only done thanks to the amazing mortgage people at Bank of China. Major drawback of the repossessed property was the despair of the people who left it - spray paint on walls, wires and cables tugged out of walls, central heating pipes kicked in, all the window locks locked and the keys thrown away.

QuiteLikely5 Wed 03-Jun-15 20:56:41

I have. It was up with an agent and had an asking price.

Does this home have no asking price?

NickySummerbee Wed 03-Jun-15 20:58:31

We did, by the time we came along it had been on the market a while & they accepted our first offer (£50k under asking - it was way over priced...). They continued to market it under we completed which they wanted doing within 28days. Agree about the condition of the house - doors kicked in, no bath plugs, various bits of destruction we hadn't really noticed on viewing. Love our house though.

Hidingmyidentity Wed 03-Jun-15 21:06:14

I have, it was priced enticingly low & attracted a lot of interested parties. I paid £15k over the asking price & was a cash buyer. Once our offer had been accepted we completed within 3weeks. They continued to market the property until the day we completed.

It is not for the faint hearted.

allinall Wed 03-Jun-15 21:06:24

We did about 10 years ago. It was a bit nightmarish tbh. They accepted our second offer ( in the end we asked them how much they needed to repay the mortgage, it was less than we feared, so all ok). They continued to market the house until contracts were signed, which was annoying and unsettling, but apparently normal.

When we moved in, the previous owners had ripped out anything of value (fireplaces, boiler, etc) and I remember crying over the hearth tiles which had gone!

Took us ages to do the place up again, and of course cost money to replace stuff.

If I'm honest I'd never do it again, although I did love that house in the end. You have to be quite robust and hard nosed, I think, and I'm obviously not!

TheAuthoress Wed 03-Jun-15 21:07:13

You'll need to be offering the asking price, as sunnyshores says they have a duty to get the best price possible and it's most likely on for a realistic price.

We bought a reposession, we weren't even allowed to see it until we had a mortgage in principle (and we had to show them that in writing) and we were FTBs who could complete quickly.

AuntOlive Wed 03-Jun-15 21:16:12

Yes it was a nightmare. The buying process that is.

Once our offer was accepted it was published and higher offers invited. Had to keep upping the offer and competing with cash buyer developers - it was awful, very stressful. And having 'won' the house and spent so much time and energy restoring it, I feel so attached to it I doubt I could ever bear to sell it and move !

AuntOlive Wed 03-Jun-15 21:19:34

Actual house too, condition as you would expect- holes in walls, broken doors, plugs not connected to anything, dodgy electrics, no appliances etc. - and a lot of rubbish left dumped inside the house. But that was all fine and sortable, it was the fact of never quite knowing whether you were actually going to end up buying the house or not that was the worst part.

DragonflyMornings Wed 03-Jun-15 21:24:27

We did, there was an asking price and we offered a little less. They accepted our offer and published it in the newspaper/rightmove/estate agents. It was very nerve-wracking knowing that we could be 'gazumped' by another offer. This went on for 21 days (I think) until we were accepted.

Good luck, hope everything works out for you!

vintagetat Thu 04-Jun-15 08:00:45

Some great info here, thank you all. We are under pressure a bit here to play the waiting game so thinking about offering close to asking price to get things moving (we are due to exchange soon on our current house). We will have about 20k we are happy to go up by if someone else should come in but hopefully they won't.
Thanks for the tips, we will chase the mortgage company today to see if they can give us "proof" and ask our solicitor to write a letter proving our capital in the current house.
I'd prefer to deal directly with the bank, the estate agent seems to be a bit useless......
I suppose at least it could be quick this way!!

kronenborg Thu 04-Jun-15 08:49:01

we bought our dream house, which was a repossession, last year.

several things to consider:

you need to be in a position to move quickly between offer acceptance and completion - so preferably you wont be in a chain, and wont require a mortgage. we were not in a chain, but we did require a mortgage, so even if you aren't a cash buyer, all is not necessarily lost. but you do need to have advanced your mortgage application as far and as quickly as possible (i.e. you will need more than an offer "in principle"). i think it would be highly unlikely that your offer would be accepted by the bank if your purchase is dependent on selling your existing property.

regarding the offer level, its not just about what the bank will accept (although obviously that is the first hurdle) - its also about the offer being of a level sufficient to deter other buyers entering the game following the acceptance of your offer - when our offer was accepted, the marketing of the property was ramped up significantly, both on the internet, in local and national newspapers (including the sunday times) - the exact amount of our offer was publicized, and the offer was extended to interested parties "to submit higher offers prior to completion". if other people are interested (and this may include property developers), and they think you are getting the property at a steal, they may be tempted to throw in an offer to try their luck.

so essentially the property is likely to remain on the market until such time as you exchange contracts, meaning anyone can come in with a higher offer until that time - this explains the need to rush to exchange. it also means you will need to spend on things like survey, searches etc, all of which will be "at risk", as you could lose the property to another buyer right up till exchange.

you are unlikely to get very much information on the history of the property, and problems associated with it, so again, you will be buying "as seen", and will have limted/no recourse, if problems emerge once you have completed.

you will need to instruct a solicitor who you are VERY confident will be fast and responsive - this may be far more challenging than it seems. i was lucky, but i still spoke to my solicitor at least daily, sometimes multiple times a day...and running between mortgage lender, solicitor, home valuation agent, surveyor etc became my entire life for the 3 weeks between offer acceptance and exchange.

bottom line, you will need nerves of steal, and you will need to play a very active "project management" role in speeding all involved parties along.

however, that said, if you are successful, you may well end up getting the house of your dreams, at a fraction of the price it would be under a private seller (we bought ours for less than 50% of the listing price it had before it was repossessed).

good luck, and remember: nothing ventured, nothing gained!

You need to have:
- a mortgage in principle from your lender
- proof of funds (deposit etc)
- proof of ID etc for anti fraud measures
- potential to move very quickly to exchange once they accept your offer
- a good solicitor in place or lined up - and you need to be in very regular contact.
- also once the offer is accepted you need to get your survey booked & paid for ASAP, also any searches.
- ready cash in place to fund the fees etc at very short order.
- you could consider asking for exclusivity after the offer is accepted but you'll probably have to offer slightly more. It would reduce the risk of being outbid & losing you survey fees etc though.
- a lot of patience & nerve. You won't necessarily get a bargain, they have to be able to demonstrate that they've made all reasonable efforts to get the best possible price for the property.

After the sale, you will have to have additional funds for things like getting the utilities switched back on (they will often have been switched off for insurance purposes, or cut off by the utility company due to debt), and the water system may have been drained to stop the pipes bursting over winter. Not like a normal house purchase. Check with the agent.

Also, some mortgage companies require you to insure the property from the date that you exchange contracts - again, check with the agent.

specialsubject Thu 04-Jun-15 10:09:53

ALL properties now need to be insured from date of exchange (not completion). This is because exchange commits you to buy even if it burns to the ground afterwards.

You can back out from the sale after exchange but you will lose the deposit. You need to discuss with your solicitor .

Ruhrpott Thu 04-Jun-15 10:25:43

We looked at one and were interested in buying it but once the offers and bidding war had started on it I decided it was too expensive for what it was and didn't offer. It also needed a lot of work doing to it and a lot had stuff had been ripped out (including the patio slabs!). The bidding war at the end pushed the price up significantly above the asking price.

vintagetat Thu 04-Jun-15 10:26:39

Thanks for all the wonderful advice everyone. Plan of action will be....
Get mortgage ball rolling which hopefully won't be too hard, last week we were lined up to buy a property but it had a zero valuation.
Check with solicitor he can do it, he's uber efficient so should be ok. Get exchange lined up for next week on our current house.
Once we have exchanged and have relevant 'proof' paperwork put in our higher offer (but still with room to go up) then harrass everyone like crazy to get it done!

Sunnyshores Thu 04-Jun-15 10:36:27

Sounds like a good plan. BTW you can get the searches done in 48 hours by paying a little more (maybe £30 more, not much). Normally they take 3 weeks.

vintagetat Thu 04-Jun-15 10:41:05

Really?? I didn't know that!!! Well worth the extra money!

vintagetat Thu 04-Jun-15 11:10:40

Great! Mortgage is ready to go on completion of valuation! First bit of good news smile

kronenborg Thu 04-Jun-15 12:36:22

one other piece of advice i omitted from my first post - stay close to the listing estate agent. many agents are only interested in making easy money, and they won't want to "sell a house twice" - meaning that if they have a firm offer from a good buyer on one property (in this case, you, on the bank-owned property), they won't be hugely motivated to continue viewings on that place, when instead they could be securing a second sale (and therefore a second commission) on a different property.

if they see you as a highly motivated buyer, in a strong position to purchase and proceed quickly with said purchase, having made a sensible (and accepted) offer, and especially if they have a rapport with you (or, heaven forbid, even LIKE you!), while of course they have a job to do for their client (the bank), they are unlikely to go the extra mile to be drumming up viewings on a place they have already "sold".

vintagetat Thu 04-Jun-15 13:20:48

We have just been up to the estate agent and explained our position and offered again. He seems to feel confident it will be accepted and said if anyone calls about it they won't be pushing and will say its close to you said, it's not really in their interests to.
So, should hear this afternoon if its accepted then we can get going!!

kronenborg Thu 04-Jun-15 13:30:11

fingers crossed for you! just a caution - it can take a bit of time for you to get a response on your offer...i think in our case it took a total of 48 hours for our offer to be presented to the relevant person/people at the bank, and for us to get a response.

silence should not always be considered a negative - however painful!

cjt110 Thu 04-Jun-15 13:47:15

We bought a repossessed apartment. We had our Mortgage In Principle. Our mortgage advisor advised us to go in 6k under the asking price and that she expected it to be rejected and that she would then go back 4k under the asking price. She did and it was accepted. All I can suggest is that you are offering too low?

Just be wary of the chestnut of "We wont show anyone else" Our estate agent did this. We had put in an offer, it had been accepted. I went to measure up and he kept checking his watch. I quieried why and he admitted he had someone viewing it in 10 mins.

Not sure if you know but with repossessions (unless its changed since 2009) someone can still come in and gazump you effectively until the contracts are exchanged. Try and get a solicitor who can move fast if possible. From start from completion for us was 1 month but we had no chain.

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