Bidding on a repossession house? Anyone encountered this before?

cubinacave

Hi, it's my first post here. Kind of nervous. Well, my hubby and I have been house hunting for over 2 months. Initially we made an offer on a house and the offer was accepted. Our mortgage application went through, solicitor in place, then the vendor went bandrupt and house withdrawn from the market. After that, we haven't had much luck in finding the house we like. On Monday last week, a house in the neighbourhood we've been after came on the market at a very attractive asking price. Arranged viewing straight away and got the first appointment on Thursday afternoon. We made an offer on the asking price as soon as we walked out of the house. Then we were told it was a repossession and the EA asked for proof of funding. We handed in our mortgage agreement in principle on Thursday and didn't hear back from the EA since. Today, EA told us that there have been 3 offers put in for the house and I was asked to give my best offer by 4pm tomorrow to be considered.

I can't understand why they set a deadline to put an offer in because in my understanding, on a repo house, anyone can still make an offer before the exchange of contract takes place?

A month ago when I was viewing a repo house that had sales proceeding going on, the EA told me that once the sales proceeding started, the vendor (bank) would only consider an offer that is significantly higher than the existing one to pull out of the sale. I didn't ask how much because I wasn't interested in that house. Now, I'm very concerned to be gazumped once I make an offer to our maximum ability. Anyone knows how significant it has to be? 3K, 5K, 10K?

Any advice or experience on buying repossession house would be greatly appreciated. We've seen over 20 houses in the past 2 months and this is the only one that seems to have everything we want within our price range. We are so nervous and stressed about it now.

G_M

I was asked to give my best offer by 4pm tomorrow to be considered.

Very common practice. It encourages you to up your offer.

because in my understanding, on a repo house, anyone can still make an offer before the exchange of contract takes place?

Correct. And any offer you make to the EA, even AFTER the 'best offer ' deadline, MUST be passed on to the vendor/bank.

I'm very concerned to be gazumped once I make an offer to our maximum ability.

This can easily happen. There are no guarantees, and the 'gentleman's agreements' that exist in the normal house-purchasing world that once an offer is accepted vendors will not consider other offers does NOT exist in the repossession world.

how significant it has to be? 3K, 5K, 10K?

Depends on the value of the house, which bank it is selling it, and many other factors.

Basically you must accept that untill Exchange of Contracts there are no guarantees. So keep your expenses to a minimum. You could easily lose your survey, solicitors, mortgage application fees etc etc

cubinacave

Thank you G_M for the reply. Very grateful for that.

A friend told us just to wait until public notice comes out to find out the accepted offer, then make a higher offer. But we run the risk of our offer may not even be considered once the sales proceeding starts. And if by chance our higher offer is accepted, will the whole thing start all over again? Public notice goes out, someone makes a higher offer... until no one makes any higher offer? That's kind of worrying.

The asking price of the house I'm offering is 90k. And the average asking price of houses on market in the area seems to be 110k at the moment, although the last land registry sale price was 87k in July '09 (similar house to the one I'm looking at, with a much bigger garden). The history sales prices in the immediate neighborhood was 105k in '08, 131k in '07 and 135k in '06. The house is in an ok condition, needs cosmetic work, e.g. full flooring and wall paper replacement. With a conservertory and front, rear garden.
Anyone recommends an offer price?

Doozergirl

Offer what you genuinely believe it is worth to you.

I don't like your friend's idea. Interestingly, my solicitor was on holiday so I dealt with someone else on the repo I've just bought and she said that she has never dealt with someone that has been gazumped on a repo - the house will find it's level. Once it has been in the paper, the is a chance it will already be running through and a slightly higher offer that may have been acceptable a week ago is no longer so.

Make a fair offer and then if you lose out, consider your options very quickly as to whether you would genuinely pay more. It does sound

There was one near me recently and it did go for considerably more than it's guide. There was a 7 day notice in the paper, at asking price, then a frenzy and another notice in the paper at £17,500 higher. If it is a genuine bargain (which it may be at the asking price if nothing else comes close) then you may have to be prepared to lose it. Eventually you will find something within budget if you keep your search area wide enough and scour constantly. If you want a good price you will always have to work for it. It can take me months to find something I'm genuinely pleased about on the price front.

Offer what you think is fair. If you win, you'll know you got it for a sensible price; if you don't, you can laugh at someone else for being too enthusiastic. I tend to steer clear of properties like this for the reason that competition creates a tendency to offer too much.

cubinacave

Many thanks Doozergirl. We've put in our best offer and now we can only sit tight and wait. Somehow I don't think we'll get the house. Too much competition. Even if our offer is to be accepted, I dread to think what my mental state is going to be like until the exchange of contracts. Will see. Repossession houses might look like good catch at the first sight, but the stress it brings.... don't know if it's worth it now.

dh_mcr

Doozergirl wrote: »

I don't like your friend's idea.

I'm curious as to why. Surely waiting until the public notice goes out is the only way to find out if the other offers are genuine.

If they are, then you can still up your offer. If the other offers melt away, you've saved yourself some money.

There are many posts, just on this forum, about people offering on a repossession and then the agent coming back telling them to increase their offer as they've been outbid. Most people have stuck to their guns and the other offer has then disappeared.

princessamy86

dh_mcr: it's a bad idea because the notice may not appear in the paper immediately, meaning the sale process could be so far along that the repo company will not consider another offer-so the op would have missed out.

I think best and finals are a good idea with repos, it's something we do when we have a lot of offers on a repo. If people adhere to it and genuinely put their best and final offer forward, it means we can then proceed with the sale and minimise the risk to the buyer of being gazumped. We make it clear to buyers that if theirs is the winning bid, that is the one we will stick with, and for the most part the other people involved play fair. Otherwise it could go on and on!

a_j_mair

Do you want to move into this house as a home or an investment??

A home you should pay what you can afford and feel is a fair price and just wait to see if someone wants it more

An investment you should stack up all your sums leaving a good contingency fund and offer the best price you feel you can make work

There is no point overstretching yourself unless you really have your mind set on it as a home

Then you can only wait and keep your fingers crossed

jhe

cubinacave.we are currently in the process of trying to buy a repo, and yes e,a also told us another offer was on the table and would we increase ours. turned out the other person couldnt prove proof of funds, then we were told another {cash} buyer was interested and again we were asked if we wanted to increase offer.public notice went into local paper within days of our offer. we were also told the e.a. had to inform the bank that own the property of any new offers over 500. good luck hope you are succesful. i personally would think twice before trying to buy a repo again if ours falls through, you need nerves of steel with all the ups and downs

cubinacave

Lots of thanks, everyone, for your valuable advice. Unfortunately, EA called at 5.30pm, saying that someone else made a higher offer than me (my bid was 95.5k) and it was accepted. Will let me know when public notice goes out. Well, as much as we like the house and can see us and kids living in there, I don't think we can take this rollercoaster ride again. Will just let this one go and keep looking. Thanks again. This is truly the best place for sound advice. :T

jhe

sorry to hear it wasnt good news. its still early days concerning the repo you put offer in for, from mortgage applications and valuations for the prospective buyer[if not a cash buyer]. there have been so many different probs with ours. but better you find out now there was a higher offer than someone lurking in the background ready to jump in at the last minute, after you have paid out for solicitor,valuations,mortgage fees.good luck hope things work out for you