How does it work if someone at top of chain wants to buy a repossession?

GoldenShadow

Hi

Hypothetical situation as havent had an offer accepted yet...

If the person at the top of the chain wants to buy a repossession, how does that work? I gather you can be gazumped as often properties are continually marketed if up for auction. Are all repossessions sold via auction? I'm not sure how it works with a chain behind or if it can without more risk.

Has anyone got any knowledge on the above?

AnotherJoe

Don't see why it would be any different than any other purchase which can fall through for numerous reasons.

GoldenShadow

28 days to complete is very fast though isn't it? I am imagining those behind them in the chain would have to pay for searches and surveys first or sooner than otherwise because exchange is when the gavel goes down on an auction property, or is that not so? Are they more likely to lose the property re continuous marketing and such than if buying a non repo, etc. And then if we've paid for searches and surveys I feel like we would be over a barrel waiting for them to find something else...

My estate agent had said we complete the chain then everyone gets searches etc done at the same sort of time. But we need a mortgage so I can't imagine how it would all come together. I don't expect any estate agent would be an expert on the logistics?

JigglyPug

Not all repossessions are sold via auction - plenty are repossessed and then sold via estate agents. You would need to ask the agent who is selling the property you're interested in what the situation is - I cannot imagine they are buying via auction if they're in a chain and if they are, I would walk away very fast!

eddddy

You're kind of confusing two things - buying a repossession and buying at auction.

Most repossessions are sold via EAs, not at auctions.


It's difficult for somebody with a chain below them to buy a repossession.

Once the bank accepts an offer, the bank wants to exchange contracts within 28 days. So the whole chain below has to be ready and willing to exchange within those 28 days.

And, as you say, if the repossession buyer is 'gazumped', the whole chain would be put on hold until the buyer finds another property.


It's not really viable at all to buy at auction, if you're in a chain (i.e. you need to sell your current property in order to buy).

GoldenShadow

Thanks.

I am confused - the estate agent said the repossession has been up for months and 'reduced and reduced' but that 'they only have 28 days to complete' if they go for it. Can an EA repo have a 28 day clause on it, is that what you mean, ie. not auction but still needs sorting fast?

I have looked for the property but I can't find anything that sounds like it is the right one. Might not even need to dig but we aren't sure the house is worth asking price and I feel less inclined to go any higher if it could be an auction one they're keen on etc. Feels like more to go wrong...

davidmcn

The lender will want it to exchange/complete quickly, but they're not going to flounce off after 28 days if there aren't any other interested parties.

flashg67

I bought a buy to let that was a repo. Just had to make sure the mortgage and solicitors were in place and aware of the 28 day limit - did it with 2 days to spare and a bit of pushing, so it can be done.
Was purchased via a high street agent, not an auction

eddddy

GoldenShadow wrote: »

I am confused - the estate agent said the repossession has been up for months and 'reduced and reduced' but that 'they only have 28 days to complete' if they go for it. Can an EA repo have a 28 day clause on it, is that what you mean, ie. not auction but still needs sorting fast?

It is probably 28 days to exchange (not completion).

As davidmcn says, they're unlikely to walk away on day 29. But what does the chain below you look like?

It the chain complete? Is everyone in the chain happy to work to your/the bank's timescale?

Has everyone done their searches, got their firm mortgage offers? (Or are they waiting for you to find a place first?) Do they need to wait until school holidays to move, or work around business trips etc?

Maybe explain your position to the EA, and they will put your case to the bank, and the bank can decide whether they would consider an offer from you.

Obviously, the longer you take to exchange, the greater the risk that you are gazumped - and so lose all your legal/mortgage fees.

sheff6107

It doesn't have to make any difference at all. I've bought a repossession and it took the usual 12 weeks. No mention of any 28 day deadline and the only difference is that the property was owned by a bank not an individual.

Remember that commercial properties owned by companies change hands all the time. The company in question this time just happens to be a bank.

GoldenShadow

I have a cash buyer who wants to be in ASAP but had agreed to wait. We have found a property, and it is those vendors who may go for a repossession. No searches etc are due to be done until the chain is closed. We are happy to move quick but are reliant on a mortgage so can't really alter the pace easily. And I don't know if my buyer will hang around if the chain breaks at any point.

There isn't much property about in the area we want to buy at the moment. I'm sure it will all work out eventually, just couldn't figure out how a repo might work!