Repossession property

[Anaisa]

I was wondering if anyone had any knowledge of how the pricing of repossession properties works? Is the initial price and any further reductions based on some sort of formula or is it down to whoever looks after the property's file to make a call?

There is a house on the same street that's been up for sale for just over a month. It's far from a bargain and at the moment it's up for £16k more than an identical house sold 2 months ago after 9 months on the market. We have made three offers, the last offer for £6k over what the other house sold for. All 3 have been rejected and they will not consider any offers under the asking price.

We can't really afford to go any higher and considering the condition of the house, I honestly believe that we have already offered more than it's worth for most people. They've not had any other offers and have not even had many viewings. It's in the 300k+ bracket so it's not like it's going to be snapped up by investors either.

The thing is we are desperate for the extra space that the house offers and for us it would be perfect. The question is - when are they likely to start considering offers under the asking price? Does it make sense for them to hold on to the house for months rather than accept £10k under the asking price? Any advice and experience would be highly appreciated as I am losing sleep over this :-)

It was my understanding that repossession sales work on a sealed bids system?
The repossessing bank has a legal duty to get the most it reasonably can, so it can take what it is owed, and any balance goes to the former owner.
I think way it has traditionally done this is to use an agent to gather in offers by a certain date, and then the highest bid gets it.
It always used to be common (and I see the occasional one now) for estate agents to advertise the house in the local paper with something along the lines of 'An offer of £xx has been received for this house which is being sold on behalf of XYZ Bank. Anyone wishing to offer above this has until [date] to do so'.
If no one offers above it, the house is yours.

Maybe it is worth speaking to the agent and finding out what the cut off date is for offers. The Bank can't unreasonably keep the house on the market if that means the former owners aren't getting their money, so it might be the agent being the awkward one.

Can only speak from my experience of working with some lenders (but not all). As others have said, they are required to sell at the best possible price (to avoid any argument from their borrower that they sold it for less than it was worth) and will have had at least 2 or 3 valuations before putting it on the market. Also, the potential buyers also go through a kind of point scoring process - if you are (say) cash buyers, or not in a chain, they'll pay more attention to you than if you're a home owner with something to sell. They want an easy, quick transaction.

There will be a timescale when those original valuations will be re-appraised (90 days from my experience) and the price may be dropped after that.

The other thing to bear in mind is that if you are going to pursue this, you need absolutely everything in place and need to push it through. Lenders (in my experience) have absolutely no qualms about giving deadlines (i.e. in which to get a survey done, whether they think you're dragging your heels) or indeed with accepting a higher offer from someone else if they're in a better position with you.

Thank you so much for your replies!

Sparechange - according to the estate agent the notice of "we are now in receipt of XXX offer" goes out after they have actually accepted an offer. There are no other bids/offers and they have not put a cut off date on it. The agent seems to be very keen for the bank to accept our offer as two identical houses on the same development took more than 6 months to go, so I think he couldn't believe his luck when we came along.

Mandy 214 - thank you for this! 90 days gives us a good indication of how long we would have to wait for, obviously assuming noone else comes forward. We would need a mortgage, but with a good deposit and no chain, so I hope that puts us in a reasonably strong position. We have an agreement in principle, hopefully it will still be valid in 3 months! The agent they went with valued it at 10k less than it is on the market for so I am keeping my fingers crossed they would be coming down by that at least.

In your experience, do they review the original valuations by a certain %?

PS I am so kicking myself for not going for the house that sold a few months ago. Dealing with the faceless corporate seller is frustrating to say the least!

You need to go back to the agent and say that while your offer remains on the table for now, you are still looking, so if you find something else you prefer, you will withdraw your offer.

If it is the choice between the agent waiting 6 more months for another buyer and therefore his commission, vs pushing your offer forward, he might support it.
If the only thing stopping it is a lack of other offers, then perhaps you can rope in a friend to do some viewings and then offer £20k less than you have?

Yes, we have indicated that we are actively looking. Great idea about a friend putting in a low offer. We will do that! Thank you!

No, I think valuers (particularly when they are giving advice to a lender) are careful to view each property on individual circumstances so certainly in my experience there wasn't a formula so no set % drop or anything like that. They might not drop it at all i.e. if they think August was a quiet time, that there is more activity once the schools are back etc, or if the market is rising.

FWIW, lenders paid absolutely no attention to estate agents, so makes no difference whether your offer is "supported" by the EA or not. They were there simply as a go between.

Thank you Mandy214. We got the impression that as you say the agent's recommendations weren't really been followed. Surely it can't be in their interest to keep the property empty for months though?

It looks like we have to be prepared for a long wait or just walk away...

Depends on what the market is like really. The debtor's liability for the interest carries on until the property is sold, and the lender can add their charges for valuations etc to the mortgage account, so as long as the value of the house isn't going down, they have nothing to lose really (other than management time etc) just waiting for a buyer to offer a price they find acceptable. If they know well in advance that there is little prospect of selling the house at a price that covers their mortgage, interest and costs, they might be more incentivised but otherwise, not so much.

Have you out your offer forward in writing - enclosing your mortgage offer, solicitors details, timescales to exchange & complete, etc. The bank would need to know you are ready to go.

Actually rereading, it sounds as if you have a house to sell?

Thank you, Mandy. It makes sense, they seem to be happy to run up the costs like cleaners, gardeners etc and seem to be happy to wait. The market for expensive properties seems very slow at the moment, especially for run down expensive properties, so we'll see what happens in 90 days. Thanks again for your help!

Sunnyshores - no, buying the house in question would not be dependant on the sale of our current house. We would get a new mortgage and use our savings/inheritance as deposit and then deal with selling our current house to avoid the chain.

We haven't put our offer in writing - we are dealing with the agent, who is then dealing with an asset management company who are acting on behalf of the bank. we had confirmations from the agent that our offers were submitted. It never got to the stage of the bank actually looking into the details - the assett management company only referred the last offer to the bank, but even that one was rejected straight away as it is under the asking price.

90 days sounds generous - the timeframe is usually 6 weeks from offer to exchange, ime. And it stays very much on the market until exchange (although, as others have said, quite often an EA prefers to take the potential money and run rather than continually show it once a decent offer is in place).

lalalonglegs - yes, they indicated they would be looking for a 28 day exchange, but that is after they accept an offer. 90 days mentioned is hopefully the timeframe for them to re-evaluate the asking price.

Apologies that I misunderstood. The last repo I bought I put in well under the asking offer (about 12% less than an already cheap guide price). I was laughed at and then a month later they came back and said that if I was prepared to complete in two weeks, they'd take it. So all may not be lost.

Yes, 90 days was only for the lenders I dealt with - might be different from lender to lender.

lalaonglegs - thank you for your post! so there might be hope for us after all!