Finding Repossessed Houses For Sale


Image showing repossessed houses for sale

UK Repossessed Houses For Sale

Almost all repossessed houses for sale are properties that have been taken by the lender because the borrower has defaulted on repayments.

Using a mortgage to buy a home means that the property is secured against the loan. If circumstances change and payments cannot be met the lender will take back the property.

Properties may also be repossessed following bankruptcy or any default on other secured loans.

The 1990’s saw a housing crash that resulted in thousands of repossessed properties in the UK. In 2007 and 2008 there was an increase of 92% in properties taken back by banks and building societies.

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Buying Repossessed property


Buying a repossessed property in the UK can get you a bargain but the process can also be fraught with difficulties unless you do some intensive research. Repossessed houses for sale are not only older properties that need renovations.

Some new builds can be purchased for around 30% below current market value. Lenders want to minimise their losses and recoup as much as possible so repossessed houses tend to sell quickly.

Photo of an abandoned repossessed house for sale
many people have a misconception that repossessed houses for sale in the UK are abandoned buildings, but this is usually not the case. Photo © Alan O’Dowd (cc-by-sa/2.0

How To Find Repossessed Houses For Sale

Repossessed houses for sale are seldom advertised as such. Most banks and mortgage companies will want to disguise the fact that they want to get rid of a repossessed property simply because they do not want to devalue their brand.

Property repossessions can sometimes be called “Below Market Value Properties” and are sold in various ways. Buying properties like these can prove to be a wise property investment choice if you are careful with the buying decisions you make.

If you ask an estate agent the status of a property, they must inform you if it is a repossessed property for sale.

Most properties classed as below market value, that were owner occupied by individuals, are sold through estate agents who are usually advised not to tell the buyers that it is a repossessed property.

However, if asked directly an estate agent must let the buyer know the exact state of play. Many repossessed properties in the UK have boarded up windows and some will have a repossession notice attached to the door.

Photo of a repossessed property
Repossessed properties in the UK come in all shapes and sizes, from older properties to more modern and good quality homes. Photo © Eric Jones (cc-by-sa/2.0)

Help with repossession:

Citizens Advice Bureau
UK Government advice on repossession

Are Repossessed Houses Cheaper?


Lenders who have taken over properties are legally obliged to get the best possible price for the property sale. If the previous owner has some equity in the property the lender must try to sell as high as possible but rarely will they do any work to make the property more attractive to buy.

A ball park figure of 30% below market value is common for repossessed houses for sale.

It is important to remember that many repossessed houses for sale will require some serious renovations as the previous owners may have stripped the property of fixtures and fittings as well as removing their own belongings.

You should also factor in re-connection of services. If you take this into consideration when looking at the asking price you can still get a very good deal buying a repossessed home, especially if you are buying a renovation property at an auction.

Photo of a repossessed house which requires total renovation
You will get an even better deal of you buy a repossessed house which needs renovation, especially if you buy at a property auction. Photo © Roger Cornfoot (cc-by-sa/2.0)

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Do I Need A Survey On A Repossessed Property?

Getting a professional survey on a repossessed property is as essential as with any other house purchase. The seller (lender) will not be able to provide crucial information about alterations or whether the house is subject to flooding.

It is possible that there are hidden defects such as problems with rising damp and these may have prevented the previous owner from selling. A full building survey will reveal if there are any serious problems.

Mae sure you carry out all necessary checks before you purchase a repossessed property, such as required survey and establishing the correct title of the property.

Photo of a repossessed property for sale
Before you buy any repossessed property for sale it is important to carry out a homebuyers survey and check for other problems, such as dampness, subsidence and structural defects. Photo © Roger Templeman (cc-by-sa/2.0)

Making An Offer On A Repossessed Property


Unlike the normal process of house purchase, making an offer on a repossessed property does not automatically mean that it will be accepted.

The seller must place a ‘Notice of Offer’ in local newspapers allowing a period of seven days for other offers to come in. The lender will want the maximum amount possible from the sale so there is always the risk of being gazumped right up to the point that contracts are signed and exchanged.

Repossessed Property FAQ

What Is A Repossessed House?

A repossessed house is one that has reverted the ownership to the lender when the owner has defaulted on repayments. This could be a financial company specialising in mortgages or a bank. The lender will sell the property as quickly as possible so that they can recoup the outstanding loan. They must attempt to achieve the best possible price so that any equity belonging to the previous owner can be recouped.

Who Sells Repossessed Houses?

Estate agents sell repossessed properties that were previously owned by individuals. Local Property Administrators deal with large portfolios of properties that were previously owned by landlords as buy-to-let. Any properties that are not sold through these means go to auction houses.

Can I Get A Mortgage For A Repossessed House?

Getting a mortgage on a repossessed house is the same process as any other property purchase. You can approach your current lender or see a broker who will be able to advise you on the best type of mortgage for your needs. Lenders will look at the value of the property and your ability to repay the loan so the fact that the property is repossessed has no bearing on the transaction.

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Buying Repossessed Houses For Sale At Auction

Many property investors visit local auction houses in order to pick up cheap repossessed houses. Properties at auction are advertised in advance and are usually available to view a few days prior to the auction.

Once a bid is accepted and the gavel goes down there is no backing out of the contract to buy the property. A deposit is required and the remaining balance must be paid within 28 days.

If you are buying from a property auction it is important to make sure that all surveys and searches are carried out in advance of the sale date. You may be unsuccessful in your bid and in this instance the money already paid out is gone. However, you could also be successful and get a real bargain property.

The Pros and Cons Of Buying A Repossessed Property


The main advantage of buying a repossessed property is the price. The lender will want to achieve the best price for the property but may only want to recoup their own losses. These could be a lot lower than the UK market value of the house.

If the house does not require major renovations, is within your budget, is the right type and in the right location you can get a good bargain.

Photo of some houses sold by auction in the UK
property auctions can be a good place to look for repossessed property and cheap houses for sale. Photo © Alan Murray-Rust (cc-by-sa/2.0

The downsides to buying a repossessed property are many. There may be little or no documentation about the property or the appliances including central heating systems and built in ovens. You may need to change all the locks and have services reconnected.

Some disgruntled ex-owners will remove all fixtures and fittings and this can add greatly to inconvenience and cost of renovating the property.

An important point to think about is the possibility of debt collectors arriving at the door. Good advice is to get a credit reference before you buy and make sure that your reputation is intact and not linked to the previous owners.

Unlike a normal transaction your offer may be topped by another potential buyer at the last minute. There is always the chance of losing the property even though you have paid out for surveys, searches and other information. Repossessed houses for sale represent a small part of the housing market but one that is currently rising.

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