Buying a reposession

mrgizmo_2

Hi everyone,

I'm looking for a little advice on buying a repo house.

We're looking for a nice family home and we think we've found the perfect one. It requires a lot of work and we're going to get a builder to look arround before we make an offer so we know what we're letting ourselves in for.

It's on for £195K recently reduced from £205K. When the houses in this road are done out nicely they can cost up to £275K. This particular house was last bought in 2003 for £168K.

We we're thinking of what a reasonable offer would be given the fact that it is with a bank and they may not be looking to get full mrket value. We were also wondering about whether it is any different to buying a privately owned house.

As I said it needs a lot of work so we are hoping to get it as cheaply as possible. It has been on the market for 6 months and apparently a few builders have looked at it but nobody has made an offer yet.

I'm thinking of offering £168K. Anyone got any advice and general info about dealing with repos???

Thanks

annie123

If builders have looked at it it may need more work than the average mortgage lender is happy to accept.
The more you borrow the closer they will look.
Speak to your lender before you offer and get a mortgage agreed in principle.

Putting in an offer as low as that is not going to make you any friends at the EA. You need them on your side as they will give their view of you as a serious buyer to the seller.
In our office you would have no chance with an offer that low.
Ask the agent what they think its worth, how they arrived at that valuation, if there have been other sales on the property ( you wouldn't know, repros stay on the market 'till exchange of contract) and if there have been other sales, if yes, why did the buyer pull out, what turned up on the survey etc.


The seller will ask for 28 day exchange from receipt of draft contract with completion within 2 weeks. They are required by law to get as much as poss for the property and have been known to withdraw them from sale if low offers come in and put them out to auction. They will not sell it for less than the amount of mortgage on it if poss via EA, hence auction. The person who was repossed may have remortgaged it since they got it in 2003.

Lets assume done up £275k, cost of work £50k plus unknown work, bit of profit margin,..start at £180k, and go up if needed.

mrgizmo_2

I have £100K from selling a previous property and from savings. We currently rent. I was planning on putting down a 20% deposit and having the rest to do the house. It's in a big mess! Anything left can go back in to savings. So I don't think I will have a big problem with getting the mortgage.

I wouldn't have thought the agent would be too bothered with the offer being low. It's been arround a little while and it becoming more run down as the guttering needs doing and the house is getting damp etc coming in now. I have already spoken to them when viewing and they have said the bank can only say no so would welcome an offer. They said lots of builders have looked at it but nobody has bitten yet. I think this may be because the market here has slowed so much in the past year.

I honestly only think it's worth £180K max as I think I will need to pay £50K to sort it out and the market value would then prob be about £250. This leaves me with £20K for going through the hassle of sorting it out. I think a £160K bid and look to settle at £170K to £180K might happen.

Doozergirl

annie123 wrote:

In our office you would have no chance with an offer that low.

An estate agent is legally bound to put forward all offers, especially in the case of a repossessed property where the paperwork can be audited. The EA should have no input at all into whether an offer is acceptable to anyone, least of all a mortgage company.

OP if you make an offer, you should receive a copy of a 'notification of offer' in the post, each time you make an offer. If the house isn't worth the asking price, then you should feel entirely comfortable offering lower (the fact it's been on the market so long is pretty clear indication anyway).

If you are not a timewaster, which you obviously aren't, then nobody has the right to judge you as one. Your agent is making it pretty clear that you can offer lower, IMO.

Good Luck

tigerminxy

mrgizmo wrote:

apparently a few builders have looked at it but nobody has made an offer yet.

That would certainly ring alarm bells with me, but if you have had it checked out properly and are confident that you are able to bring the property up to scratch within a budget then I don't see why you shouldn't make an offer. They can only say no (or yes!).

Gorgeous_George

I'd put the offer in writing perhaps using recorded delivery or through a solicitor.

I say this because I had some friends whose dad was a surveyor. The bought a repo at a huge discount because dad knew the right people at the EAs.

Never put in an initial offer that you expect to be accepted.



GG

annie123

Where do you live? No sign yet of a slow market here in London.

Pleased to hear you have enough cash to do the work, you would be surprised how many offer without thinking.

Yes they can only say no, listen to the advice from the agent about price. Whilst we act for the seller, we want the sale agreed and exchanged, (we do look after your interests as well ) or we dont get paid!

We are not all bad.:D
Get as many free reports as you can on the property and get your homebuyers report done at the same time as the mortgage val, has weight then if down valued, money retention, or essential works need doing. Just incase you need to re negotiate the price

Good luck,

mrgizmo_2

Yes. That rand alarm bells with me so that's why I'm getting a builder friend to take a look. I'm hoping it's just that a builder will be looking to make a fair few bob where as I am hoping to just get a nice house done the way I want it for a reasonable price after all costs.

If it's worth £20K more after costs with the work done that's not a lot for a builder when he factors in fees etc and the turnarround time so I hope it works out for me as we want to live there for the forseeable future.

I agree ith the comments from the other poster. I shouldn't be put off making a low offer and trying to pay what I think it's worth. I think a little sanity may be returning to the market this year as the rates go up. We can't keep having property rising more than average earnings and inflational surely?

mrgizmo_2

It's in Liverpool. Just moved back from Cambridge and the market is dead as a dodo here. Well it is in the catergory we're looking at (5 bed plus old charactor property). Not a lot of Liverpool people can afford to pay the prices and the anecdotal evidence suggests out of towners buying up as investments. I wish people just played with shares rather than speculate on one of lifes most basic necessitys.

Doozergirl

mrgizmo wrote:

I wish people just played with shares rather than speculate on one of lifes most basic necessitys.

You'd get a few less answers to your questions if we did!

But I know what you mean, lol

spunkeyrich

Being an EX Estate Agent I agree with annie on what she says about too low with an offer. Legally you can put in whatever offer you want, just because its a repossession doesnt mean they sell it cheap. hence it hasnt gone to auction.
Now normally what a motgage company does is get valuations usually 3 before they place a market price. sometimes they will TEST the market at a higher price than is recommended. What matters to the motgage company is what interest they are getting. If no offers come forward then they will redo the price. If the home is not worth buying as a builder investment (there is alot of costs involved) then it will sell to someone like yourself who is willing to do the work to live in it rather than sell within a time period.

With your offer try to plan ahead. get a builder round to check what he thinks it will cost, also the time it would take to make it good. Try and ask a builder who you have had dealings with as it may influence his estimate.

rich