How keen are banks to get rid of repossessions

robert32

Hi there,


I've got my eye on a couple of repossessions at the moment. In terms of negotiating price, what are the banks' current attitudes towards them? Are they keen to get rid of as soon as possible, or are they more prepared to wait to get the better price? How long would they hold-out before dropping the price?






Rob.

[Deleted User]

By law, they have to obtain the best possible price to reduce the owners debt as much as possible.

Therefore, they have to post a notice/ad in a newspaper of any bid they receive to see if other people are willing to pay more. Another person can bid more any day until exchange happens.

G_M

(near) duplicate thread.

https://forums.moneysavingexpert.com/discussion/5344065

Stick to one.

robert32

Umm... no, that's a separate thread about vendors passing on offers to banks... nothing to do with how long the bank will wait to drop the price.


I fully understand that the bank need to get the best price and that an agreed price needs to be advertised. What I am talking about is that the bank will (internally) have a minimum price that they will accept. If no one ever meets this price, I don't think it's realistic that they will just sit on the property forever. There must come a point where they decide that the minimum acceptable price is unrealistic for the market and they are losing more money by holding onto the property. My question is, does anyone have a feel for how long a bank will wait before deciding to drop their minimum price?




Rob.

csgohan4

how long is a piece of string?


Depends on the area and if properties shift quick or slow, the housing market trend in your area. Whether the banks tend to put it to auction if it doesn't sell at their price e.t.c.


Your guess is a good as ours

davidmcn

They have much the same attitude as anybody else who wants to sell a property reasonably quickly - there's no "minimum" price (unless there are prior charges to pay off), they just take advice from the local agents about the best asking price/method and will review it regularly if they're not getting offers.

robert32

Thanks. Will hold-off. There's been a few in my area recently (most I've noticed since 2008-2011 period). Will probably let a couple go to get a feel of the trade-off between original asking price, actual sale price and time to sell. A lot are new build flats so hard to gauge as the market is now saturated and were so overpriced when new.

Thrugelmir

robert32 wrote: »

I've got my eye on a couple of repossessions at the moment. In terms of negotiating price, what are the banks' current attitudes towards them? Are they keen to get rid of as soon as possible, or are they more prepared to wait to get the better price? How long would they hold-out before dropping the price?

There's always an option to auction if there's no serious interest or the property is suited to cash buyers only. .

Alarae

robert32 wrote: »

I fully understand that the bank need to get the best price and that an agreed price needs to be advertised. What I am talking about is that the bank will (internally) have a minimum price that they will accept. If no one ever meets this price, I don't think it's realistic that they will just sit on the property forever. There must come a point where they decide that the minimum acceptable price is unrealistic for the market and they are losing more money by holding onto the property. My question is, does anyone have a feel for how long a bank will wait before deciding to drop their minimum price?




Rob.

It's actually not as rigid as most people believe, it's a balancing act between a quick sale (to minimise accruing interest to the mortgage balance) and the best sale price for the property. For instance, if a property was close to exchange and a higher offer £1000 more was received, it may be more prudent to stick with the current sale as the delay to completion in accepting the higher offer is more or a detriment than a slightly higher price.

Most banks will instruct a RICS surveyor to value the property and this will usually be used as a baseline for minimum sale price (although mandate may allow for lower offers to be accepted). Agent valuations will be used alongside the surveyor's recommendation to set the asking price.

Usually after 4 weeks of marketing with no acceptable offers the price will be reviewed, and then at further intervals as required. If the market is not responding to the property then it may get shifted to auction.

There is no definitive timeline for a property to hit it's lowest price. In fact, some properties have had a large discrepancy between the Base price and asking price so could have had reductions for some time before the lowest price was met. Even then, the banks will consider offers below thr baseline as and when required if the interest dictates to do so.

SaveSomeMore_2

deannatrois wrote: »

By law, they have to obtain the best possible price to reduce the owners debt as much as possible.

Therefore, they have to post a notice/ad in a newspaper of any bid they receive to see if other people are willing to pay more. Another person can bid more any day until exchange happens.

This, although surprisingly banks will often do little to maximise the sale value. The property will be checked and cleaned to a very basic standard, but the houses are often presented and photographed very poorly (un-mown lawns being a common one!), and sold "as is" when simple cheap improvements would make a huge difference to saleability. Surprising as it really is in their interest too to get as much as possible.

To the OP though. If you are buying a repo stick to around the asking price (which is usually discounted to the lower end of the market value estimates anyway) or prepare yourself to be gazumped.

Mossfarr

I have bought two repossessed properties and each time my offers of 10% less than the asking price were accepted.
I made sure I was in a very strong position ie 25% deposit available, mortgage offer in place and most importantly I was able to complete within 28 days.
Although both offers had to be published and higher offers invited I found that the estate agent was able to 'manipulate' this process to a certain degree so that I wasn't gazumped.
Get yourself in a position to proceed quickly & Just go in with low offers and see what happens. You've nothing to lose at this stage.