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Repossessed Property Buying: Quick Briefing Discussion

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  • Feel free to read this post if you're in the middle of repo fun - a long but hopefully informative story about our experience...

    Back in June, when we were up to our ears in anxiety, stress and excitement about the offer we had put in on a repo (which just so happened to be our dream house), I was diligently scouring the internet for every small and large piece of advice or buyers' experience on purchasing a repossessed property in Britain. I spent many, many hours reading the extremely interesting discussion threads on MSE on this topic, some of which were helpful and chimed well with our experience so far, and some of which sounded so foreign, perplexing and dreadful that I worried what future horrors awaited us. I promised myself that, no matter what the outcome with our repo quest, I would contribute to this thread and share our experience.

    First, we had been searching for over 2 years for a house that fit our criteria in terms of value for money, quality of construction/finish and location, in the £200-£350K range. As we live in rural Wales, we spent this time viewing a wide variety of properties, from decrepit sheds on several acres of land with amazing views to beautiful 4-storey town houses in areas so vile you wouldn't wish those postcodes on your worst enemy. We were resigned to the fact that if we wanted non-pokey rooms, some outside space AND a quality interior finish, we'd need to focus at the top range of our budget (or beyond). However, after many long months of looking, in the start of 2014 we changed strategy and decided that large, nice properties were too hard to find and when they did become available, they did not move quickly on the market (which didn't bode well for future sale), so we decided to instead focus on smaller, nicer properties in the <£250 range, as these properties moved much more quickly in our area.

    Cue the listing for our dream house. Having spent several months looking at very small houses with tiny gardens in the <£250 range, one day we saw a new listing for a 4 bedroom house in an ideal location with killer mountain views for £215K. This price was waaay too low for the area/size/standard. We knew something was too good to be true. At the viewing, the high standard we saw in the photos online was even more impressive in real life, and we kept prying the estate agent about why the price was so low until she finally admitted that the property was "likely" a repossession (no idea why the estate agent wasn't forthcoming about this, but after more digging, we learned that indeed, the property was a repo, and we also learned the back story, which, luckily for us, didn't raise any red flags). After a second viewing (within the 1st week of the property being on the market), we put an offer in for £200K - this was not accepted, but ultimately £202 was. We learned that around the same time, several other people had put in offers much lower that were immediately rejected by the bank selling the property.

    After our offer was accepted, the 3-week clock for exchange started ticking. If anything, we worried this was way too long - we were first time buyers with a 20% deposit and knowing that the bank selling the house would be actively seeking higher offers until the moment of exchange, we wished we could speed up the process. However, there were a few fiddly issues about the property that our (excellent) solicitor had to settle with various utility companies (complex easement issues), and of course we needed time to have the survey done and digest its results, so 3 weeks was probably the minimum time needed to accomplish these things.

    For anyone in the process of trying to purchase a repo, you will know that the weeks between offer and exchange date are agonizing - we jumped every time our phones rang, and seeing a call from the estate agent made our pulses race with panic. It was during these weeks that I was reading many horror stories (and some happy endings) on this forum, wondering what was in store for us. One week into the process, we had a homebuyer's survey undertaken, and we took the advice of another MSE piece and went around with the surveyor and learned priceless information about the property. Unexpectedly, when we showed up for the survey, we noticed that the owner of the adjoining property had erected a structure that questionably damaged the property we were interested in purchasing. Our surveyor shared a wealth of advice for what we might do about this.

    As the days ticked closer to exchange, we had yet to hear from the estate agent that a higher offer had been accepted (though we dreaded a phone call telling us this was the case pretty much non-stop). Less than 1 week before the exchange date, we took the advice of my hard-nosed businessman of a father, and discussed with our solicitor the possibility of lowering our initial offer by £5K in light of the property damage performed by the neighbour (the story is even more interesting - it turns out the neighbour was one of the people who put in an extremely low offer, and then wasn't pleased when their low offer was rejected, and this is what led them to erect the damaging structure - likely hoping to scare away any other potential buyers - but we weren't to be thwarted!). I felt we were playing with fire considering lowering our already low offer on a significantly undervalued house. I also thought we had done well to not be gazumped so far, and the damage done was pretty trivial, but our solicitor thought it was worth trying to reduce our offer, and communicated our request to the repo bank's solicitors. Several tense hours passed, where we heard from the seller's solicitors that the seller was extremely unlikely to accept a reduced offer, especially so close to exchange - and then a few hours later, we heard our new offer was accepted, but the seller would not extend the exchange date.

    This was a blessing and a curse - a blessing because it limited the number of days another buyer could trump our offer, but a huge challenge as well, as we had to have all our mortgage documents redrafted (which wasn't trivial, but the fact that we went with a local solicitor and a local bank/mortgage advisor completely saved us in this situation). Fast-forwarding through all the drama and suspense of those final days, I'm pleased to say that in the end, we DID get our dream house, and for £18K less than an already absurdly low price. We completed 1 week after exchange, and when we had the keys to our house (!), we noticed that the estate agent had left the list of viewers on the kitchen table - and we saw there were several viewings the Friday before the Monday we exchanged!! I'm so pleased we didn't know this - it would have added another unbearable layer of uncertainty and stress to what was already a crazy stressful (but exciting!) situation.

    So, long story short, our repo quest had a very happy ending. We've now been in our property for nearly 5 months, and still cannot stop pinching ourselves at what an amazing house it is, and how incredibly lucky we were to find this house (full stop), to purchase it at a way undervalued cost, AND to have an extremely smooth and non-prolonged process between offer acceptance, exchange and completion. For anyone out there who's in this process, just keep in mind that it's impossible to predict how your own situation will pan out - but from our experience, the 3 weeks of stress and uncertainty were absolutely worth it- and I hope there are more than a few people who read this that have the same happy ending!

    Also, to pass along some thoughts for people considering or committed to buying a repo, here is some advice we can share based on our experience:

    1) FIND OUT WHY the house you'd like to buy is a repo - the estate agent likely won't divulge this, but pry - and talk to other people in the town and/or neighbours - we think it's important to know the back story in case there are things to be worried about

    2) Try to minimise out of pocket payments in case everything falls through - we were EXTREMELY cautious about not paying for anything that wasn't absolutely necessary in case we were outbid. For this reason, we chose a fee-free mortgage (which ended up being identical to a fee-paying one in the end), which meant that if our offer were to be outbid after everything had been arranged, we weren't out of pocket several hundred pounds.

    3) Know how strong your position is - we were first time buyers, we had a 20% down payment and we represented a strong hand to the estate agent from the first time we walked in the door. We also had already spoken to a solicitor before making our offer, and could assure the estate agent that we had everything in place to enact a speedy sale - we are certain this helped us.

    4) Retain the best solicitor you can, and if possible, speak to him or her before you make your offer and ensure s/he can turn the sale around in the time you need. We went with an older, well-established local solicitor (which, curiously, was exactly the type of solicitor the estate agent advised us against- no idea why). Yes, less expensive solicitors could be found online, but this chap knew the local area and market extremely well, could argue on our behalf in Welsh and English (which was quite helpful) and was located 25 minutes from where we worked, meaning we could pop over to the office to sign or return documents - this ended up being essential in the final days when our offer changed.

    5) Clarify with the seller what stays and what goes - you will read lots of advice about this when buying a repo, but we were particularly concerned about the luxury kitchen (including £1000 sink and £3000 cooker) - the last thing we wanted was a nasty surprise when we opened the front door after completing to find large gaps in the kitchen where extremely nice units had formerly been (fortunately, everything in/on the property was included in the sale, including lots of interesting detritus in the loft!)

    6) Finally, keep the clock in mind but know there's more flexibility if you're in a strong position (and there aren't dozens of others vying for the same property) - the 3 week turnaround is fast, but in our experience, the selling bank was willing to give us a few extra days (without charge) if we needed it, as they saw we meant business and we were making progress with all the procedural steps that needed to happen. Anything you can do to bolster the strength of your purchasing position should help - so show a strong hand, but make sure it's credible!

    That's our advice - good luck to anyone reading this who has their eye on repo - the one thing we were told to NEVER do, for a repo or any house, was to fall in love with the property. I must say this is exactly what I did the moment I walked into the place, and I knew it would be agonizing if we didn't get it in the end and/or if we entered a protracted bidding war - but sometimes, these things DO work out beautifully - and I hope your situation is similar!
  • Old_Git
    Old_Git Posts: 4,751 Forumite
    Part of the Furniture 1,000 Posts Mortgage-free Glee! Cashback Cashier
    my first house was a repo.If it hadn't been a repo i couldn't have afforded it.
    "Do not regret growing older, it's a privilege denied to many"
  • Hi, there,

    Could anyone direct me to the right department.

    We are interested in acquiring a property in London, however the vendor said that it was repossessed and in a hands of LLoyds receivership and that she unable to proceed with us with the sale....
    So annoying - we spend so much time looking around and the agent did not disclosed that time is ticking for the the offer to be put.
    We tried to call LLoyds general number - with no luck.

    Kindest regards,

    Oli
  • new to MSE and wanted some advise, my wife has fallen in love with a property in a nice area which is surprisingly affordable. Its a repossessed shared ownership property. 55% is owned by a local housing association & 45% is now owed by the previous lender. To be able to make a bid on the property we had to register & be accepted with the housing association regarding affordability & this was going to be our sole property. We have a DIP from our mortgage adviser which we thought would be sufficient to place a bid on the property. We have been told that we can’t bid on the property until we have an affordability check with the estate agents mortgage adviser. I thought they were touting for business so i explained we already have a DIP but we were told unless we attend their offices with proof of identity, bank statement and the usual ID checks they would not put forward our offer. I refused but as my wife is so in love with the property i agreed to attend later this afternoon. But here’s where i feel something is not right, the property was advertised @ £99,950 & has recently been reduced to £94,950 when asked about the reduced price they said by instruction of the company, they continued to say that the 45% share price was fixed @ £90,000. Asked why it has been advertised nearly £10,000 over the fixed price they said because they were instructed to do so by the company. My understanding is if an offer is accepted its advertised for 7 days plus a higher bid can be accepted at any time. Apparently a bid has been accepted on the property, we can’t outbid them but if our bid is also accepted its a contract race to establish who gets the house. Im very confused because i have never heard of this practice before & seems not quite right. Has anyone ever come across this before?
  • Though this article states general tips for buying a Repossession, unlike other articles throughout Money Saving Expert it does not provide websites to be able to view Repossessions nor who to contact in order to find out the latest Reposessions. Can you please provide more information on who you contact, where you go, etc? The article leaves you in a position whereby your only option is searching through the UKs Auction Houses....:(
  • davidmcn
    davidmcn Posts: 23,596 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    sneri wrote: »
    Though this article states general tips for buying a Repossession, unlike other articles throughout Money Saving Expert it does not provide websites to be able to view Repossessions nor who to contact in order to find out the latest Reposessions. Can you please provide more information on who you contact, where you go, etc? The article leaves you in a position whereby your only option is searching through the UKs Auction Houses....:(
    The majority are just listed through mainstream estate agents in the same way as any other properties. Not sure it's really advantageous to be able to find ones which are repossessions, but there are usually clues from the listings e.g. obviously vacant possession, disclaimers about it being sold as soon, photos show labels on taps etc warning that the plumbing has been turned off and drained.
  • lincroft1710
    lincroft1710 Posts: 18,873 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    sneri wrote: »
    Though this article states general tips for buying a Repossession, unlike other articles throughout Money Saving Expert it does not provide websites to be able to view Repossessions nor who to contact in order to find out the latest Reposessions. Can you please provide more information on who you contact, where you go, etc? The article leaves you in a position whereby your only option is searching through the UKs Auction Houses....:(

    Remember - not all repos are low price bargains and not all low price bargains are repos. Also, auctioned properties often comfortably exceed their estimates.
    If you are querying your Council Tax band would you please state whether you are in England, Scotland or Wales
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