Repossessed properties are residential structures that have been seized by lenders because repayments aren’t being made. As mortgages are loans secured against a home, repossession can happen if homeowners miss payments. Although risky, buying repossessed properties can be very profitable.
It’s possible to get repossessed properties for up to 30% less than the original market price, and it can be a lucrative investment—if you’re willing to put in the work.
Here are expert tips to give you a good start.
Take Advantage of Bank Offers
Banks often want to sell repossessed properties fast, so you can get a great bargain with ease. Homes being flogged after repossessions typically go for super low prices since the seller, which is usually a bank, are after quick sales as it’s losing money during the time the property stays empty. This means they’re more than willing to sell it for low prices. Although it can be tempting to grab a deal from the bank, it’s best to consult with a foreclosure defense attorney to get your dream home for the best deals possible. A professional will be able to give you all the options possible, saving you more money in the process.
They Don’t Need to Take the House off the Market
Lenders are usually allowed to continue marketing the repossessed properties even after accepting a particular offer, meaning you may get gazumped, leading to surveys and legal fees later on. That’s why it’s worth finishing as soon as you can.
Check out the Situation with Tenants
It’s best to confirm that the past tenants have handed over their keys, and the property is 100% unoccupied. That’s because if a buy-to-let landlord previously owned the property, that site may get resold with tenants in place—making them your responsibility. Unless you’re planning on renting the site out, check out the situation with tenants beforehand.
Get the Biggest Discount Possible — Responsibly
Prices for repossessed properties are anywhere from 10% to 30% off market value. Though it can be tempting to settle for the most significant reduced amount possible—remember that the more work needed, the bigger the discount. But since more punters are going to auctions, savings may be slightly less, but it’s still worthwhile to ask about their offers.
So, make sure to inspect properties beforehand before settling for the biggest discounts, helping you avoid more expensive repairs and renovations later on.
Don’t Buy on a Whim
To get the best deal possible regarding property price and the condition of the place itself, visiting the area several times with a professional solicitor or surveyor is ideal. Doing this helps you find any issues you may have missed during your initial visit, allowing you to haggle the price down more.
Thorough inspections are crucial when considering buying repossessions as there could be several hidden defects that can cost you thousands later on. Additionally, when buying repossessed properties, there are no existing owners to help you get an insight into the home, such as the temperamental boiler’s state.
Research and Budget
Finally, before setting out and buying a repossessed property, make sure to do your research and set up a realistic business plan. This plan should account for any professional costs, finance payments, repair, and renovation expenses—and then build your budget to see what you can do with what you can afford and make the most out of it.
Doing this helps you quickly identify how much you can afford to spend on it, ensuring a successful and fruitful investment.
Repossessed properties are cost-effective real estate investments that you can make, allowing you to get houses and other structures at low prices, but it has its share of risks. So, make sure to watch out for the tips mentioned to get the best deals possible—giving you quality properties at minimal costs.