Buying A Repossessed Property
Buying repossessions (or â€œcorporate salesâ€ as agents prefer to call them) can give you access to property at bargain prices. You then renovate it and sell at a decent profit or rent it out and obtain a positive yield.Â But you need to be aware of the pitfalls so as not to undermine your property investment strategy.
Repossessed properties are generally offered at below market value prices and can be identified with the help of estate agents or found at auction houses. And if you are a cash buyer you will have access to the best bargains. If not then you must at least have funding in place as the seller will need to see proof of funds before even considering an offer.
A property isn’t automatically a bargain just because it’s a reposession. Always establish previous property sale prices and visit the property so you can calculate what you will have to spend before you can resell. Work out the true renovation costs and there may be little margin for profit. Allow 20% contingency on your costs before making an offer.
TheÂ bank in possession of the property must seek to obtain the highest price possible and they will never take a property off the market. If they accept your offer, you can still be gazumped at any time up to exchange of contracts.Â As an investor there is a ceiling to what you can pay and still make a profit so expect to be gazumped because it can and does happen often. The bigger the bargain, the more chance you will lose it.Â Emphasise to the seller that you need to complete quickly. Make sure you use a solicitor who act fast.
It’s also wise to remember that you will no doubt have utilities bills where supplies may need to be reconnected. And also note that departing owners may leave the property stripped and/or vandalised. This happens frequently with repossessed properties.
Repossession purchases are seldom as easy as people may think. But be careful and know what you are getting into and there are bargains to be had. Get it wrong and you can get in a heap of trouble.