Buying Repossessed Houses - a gazumping nightmare??

diywannabe_3

Hi everyone,

I've found the perfect house for myself and my partner to live and work in but the house was repossessed from the previous owner and, as such, is in the hands of the respective lender. I have little with which to buy a house but I have been told that as soon as I put an offer in for said house, there is a protocol that must be followed by the estate agent dealing with the sale on behalf of the lender. Subsequent to my offer being submitted the house must be advertised by the estate agent with an invitation for better offers. Should no one outbid me I have 28 days within which to complete and exchange contracts. But throughout this 28 day period there is the potential for a higher bidding to enter the scene. If I am outbid then I have to make the decision whether to continue bidding and thus risk losing both my survey and solicitors fee.

Firstly, does anyone know if this is actually a legitimate way to sell a house? All I can see, should I enter into this system, is the potential to be gazumped numerous times until I reach my absolute mortgage limit. It could turn out to be a grim 28 days!

Secondly, how can I ensure that the estate agents (who will inevitably gain from obtaining the highest possible price for their client - the lender in this case) are not in fact suggesting other parties are outbidding me when in fact they are duping me into bidding against myself?

Thirdly, I have been advised to use the solicitor attached to the estate agent since this person will understand the importance of completing within the 28 days. Since I don't have a solicitor I feel I could easily be duped into accepting an easy way out that could lead to my house-purchasing demise!

And forthly, my parents and my partner all say that I should steer clear of this property, but it really is perfect, so from the more experienced of you moneysaving members, what do I do??????

As you can tell, I'm very aware of the pitfalls but at the same time, there must be some assurance that the 'bidding war' that may ensue subsequent to an offer being submitted by either myself or whoever else chooses to, is fair and above board? Saying that, why did this house not go for auction where bidding is expected instead of going through this route??

If I've been given completely misleading information, please let me know what on earth to do about this 'perfect' house!!!

many thanks

fistfullofdollars

Yes - but can lead to a bargain

You'll be supprised how easy it is. My parents bought a repo house back in 1999 and have made a tidy sum on it.

You just have to remember to allow for carpet costs. Every one I have seen recently they take the carpets. Anyone know why?

diywannabe_3

thanks for the info... thankfully the previous owners have already moved out (although some random bits of furniture are left).... i feel quite sad that these people have evidently succumbed to the financial pressure that the current housing market has created.... at the same time though, this house is the best i can get with my budget so it's a tough one to just walk away from....

did your parents have to add much to their initial offer due to other interesting parties?

CB1979_2

round my way, all the repos are advertised as

"we act on behhalf of the mortgagees we have received an offer of £XXXXX, this offer will be accepted once contract's are completed" or something like that.

basically if you can get the survey and everything sorted quick smart, then you may be fine.

I do believe there is a period in which they have to get the best price for the previous owners, not just get the price to cover the lenders.

diywannabe_3

ahhhh so in fact once the 7 day advertising period has been fulfilled by the estate agents an on-the-ball solicitor could complete soon afterwards to eleviate the stress of being outbid...? anyone know a good honest solicitor??? ;-)

thanks CB1979

TANZA_2

We were told 28 days to complete. The house we're looking at is up for 175000 but the highest offer so far is 151000=the estate agent told us. However, it hasn't been accepted and the sellers have now gone with another estate agent for the same price. We had a builder out to look at it and he said it would cost about £20000 to put right and the going rate for those houses is £173000 so unless you get it cheaply it's not worth it.
But the estate agent said if we did put in an acceptable offer we would have 28 days to complete-very strict on that. Once an offer was accepted the house is to be advertised in the local press and then we could be outbid but they would try to put off any prospective buyer-these are the selling estate agents!! Anyway, we decided it was all too stressful and we couldn't afford to lose survey and solicitor's fees so we're looking at other properties.

Doozergirl

diywannabe wrote: »

Firstly, does anyone know if this is actually a legitimate way to sell a house? All I can see, should I enter into this system, is the potential to be gazumped numerous times until I reach my absolute mortgage limit. It could turn out to be a grim 28 days!

It is perfectly legitimate. The mortgage lender is legally obliged to obtain the best price for the property and they need to be able to prove that they did this. If they were to sell the house for less than the amount of the mortgage, the previous owners would be encumbered with the outstanding debt. Imagine how you would feel if it were you and the mortgage co hadn't got best price for you?

diywannabe wrote: »

Secondly, how can I ensure that the estate agents (who will inevitably gain from obtaining the highest possible price for their client - the lender in this case) are not in fact suggesting other parties are outbidding me when in fact they are duping me into bidding against myself?

Agents are interested in selling as many house as they can, not trying to get an extra £20 commission for getting you to bid up a couple of £k. They will move on to other properties as quickly as they can.

diywannabe wrote: »

Thirdly, I have been advised to use the solicitor attached to the estate agent since this person will understand the importance of completing within the 28 days. Since I don't have a solicitor I feel I could easily be duped into accepting an easy way out that could lead to my house-purchasing demise!

Mmm. Bit of a sales tactic, IMO. Any conveyancing solicitor will understand the importance of 28 day exchange in the case of a repo.

diywannabe wrote: »

And forthly, my parents and my partner all say that I should steer clear of this property, but it really is perfect, so from the more experienced of you moneysaving members, what do I do??????

Do you think you are paying market value for the house? If so, I think there is little chance of you being outbid. Once you start making big moves towards exchange, the mortgage co will be less inclined to take other offers - they need a commitment as much as they need the price. I have bought repossessions at pretty low prices and have never been challenged though I have always been aware that i was taking a gamble in those cases.

It didn't go to auction because they would have felt that the property was capable of acheiving market value through an agent. They aren't purposely inviting other offers, they are showing due diligence.

I'm not voting as I don't agree with any of your options.

diywannabe_3

evidently you all have varying experiences in this area and it was a real comfort to read your responses to my panicky posers... i hadn't had any worries about putting in an offer for the place until i spoke with a financial advisor who outlined the cons of buying a repossessed house and had some very definite ideas of what i should do.... and i have to say the information spooked me to say the least.... but as i said originally, the house is too perfect to settle for one opinion and i'm not the sort of person to let it go so easily... many thanks to all of you, i'm now in a happier frame of mind to pursue it... i'll let you know how it goes!

Mihangel

hi im intrested in peoples opinions too as i am currently chasing a repo house.

Jessycat

I'm really interested in this also. I had offer refused last week on a repossessed property as the mortgage are owed £97k on the property & either them or the estate agency are insisting they won't take anything less. The property has been on the market for a while, currently on at £97950 and has recently been reduced by £2k.

Is it mortgage permitted to go less than the asking price? The house currently has no bathroom & there is no bathroom window. It needs quite alot of work doing it.

Thanks.