Repossessions and Making an Offer
1 Nov 2016
With a trickle of repossession properties still coming to the market, and the sales market still going strong, here is our guide on repossession properties.
What is a repossession property ?
This may sound obvious, but it is a property where somebody has failed to keep up with payments for the property, such as their mortgage payments. Eventually the bank or building society takes back the property to sell and to clear the debts. This is usually a very last option for them.
What happens next ?
There are a number of companies that banks and building societies use to handle all of their repossessed properties for them. We as the estate agent are then chosen by these companies, typically this is done through demonstrating to them, that we are able to sell the property at the best price for them, and their client, i.e. the bank or building society.
Making an Offer ?
When making an offer on a repossession property the company handling the property sale will insist on getting a copy of the proof of funding through. You will need to send through copies of bank statements to show the funds for the purchase or the deposit through to the estate agent. You will also need to show your agreement in principle if you are getting a mortgage. Or will need to provide mortgage broker or accountants details.
Offer Accepted ?
Because your offer is being sent through to a company, who then has got to send it through to the bank it can take longer than usual to get an offer accepted or declined. Once your offer is accepted, it is usual for the bank and the handling company to give you a deadline to work to in order to get the property exchanged, typically 28 days to exchange with a mortgage or 10 days to exchange with a cash offer purchase.
The Extra Risks
When buying a repossession the property is not taken off the market until exchange of contracts. This means that up until this point, someone else can view the property and put an offer forward which could be higher than yours. The initial accepted offer on the property is also usually advertised online or in local press, asking for higher offers.
This means that you could spend money on solicitors fee’s and surveys for a property, only for someone else to put in a higher offer at the last minute and for you to loose the purchase, and all the money that you have spent on it up until that point.
One thing to keep in mind is that repossession sales are almost sold in an auction fashion with everyone knowing what the offer that has been accepted is, and then given an opportunity to bid higher. As with auctions the best thing to do is have a maximum price you will pay for a repossession and to stick to it.
Speed is of the essence in a repossession purchase, the longer you take to exchange contracts the more time that someone else has to put in a higher offer. Choose the very best solicitor that you can, one that assures you they can exchange in a short timescale. This could mean the difference between a bargain, and loosing the purchase.
Happy property hunting.
Sales and Lettings Manager
Suttons City Living