Written by: Edward Feather on 3rd November 2022
Online property auctions offer buyers the chance to purchase homes below market value, in a variety of different circumstances. Repossessed properties are commonly brought to auction for sale, as lenders try to recover their costs as quickly as possible.
But what should you consider before bidding on a repossessed house? Here, we’ll explain what repossession means, what the benefits of buying a repossessed property are, and what you should look out for before bidding.
A repossessed property has been seized by the mortgage lender, or other relevant financial body, because the homeowner defaulted on their mortgage payments. Repossessed properties are often sold at online auction, because the lender will be hoping for a quick sale to recover the money they’ve lost via non-payment. Auctions are a faster way to sell a property, with an average time of 28 days to legal completion.
Because repossessed properties are often sold at auction for speed, their guide price is usually lower than its current market value. Repossessions are an inconvenience for lenders, who’ll be looking to recoup their losses as quickly as possible. Buying a repossessed property means your sale will complete faster, and you’ll likely save a significant amount of money at auction.
Repossessed properties are sold without a chain delay, and the immediate post-auction legal exchange ensures a more secure and speedy way to purchase.
Before you commit to bidding on a repossessed property at auction, there are some things to consider:
Whilst it’s not always the case, some repossessed properties may have been left in poor condition by the previous owners. Be sure to factor in any work required to bring the property to a habitable condition, from replacing fixtures and fittings to bigger remodelling projects.
When you buy a property at online auction, regardless of whether it’s a repossession, you and your solicitor are able to view the legal pack before the auction date. However, we’d also advise arranging a survey on the property you wish to buy beforehand, to avoid any unexpected surprises further down the line. There may be hidden structural defects you wouldn’t be able to recognise yourself, so a survey will help you to make a more informed decision before entering a bid.
As with all property types sold at auction, the process is much faster than a private treaty sale - so ensure you have your finance in place before bidding. Whether you’re paying for a property with mortgage funding, a loan or cash, if you’re the winning bidder you’re legally obligated to buy the property on the fall of the virtual gavel. To avoid any delays or issues down the line, make sure your finance is taken care of first.
Online auctions can be highly competitive, especially if a property is in a good condition. Decide your maximum bid price before bidding commences to avoid getting carried away, and factor the potential sale price and any additional renovation work required into your budget.
As the property has been empty prior to being brought to auction for sale, it’s likely that gas, electricity, water and phone lines have been disconnected. Although this isn’t too much hassle to reinstate, it does add extra time onto getting the property running again and could incur costs at your expense. Factoring utilities into your overall budget is advised.
If you’re keen to add an investment property to your portfolio, or simply want to get onto the housing ladder at a lower purchase price, repossessed properties can enable you to get a good deal and complete your purchase much faster.
View the properties we have available for sale at online auction today.
However, buying a repossessed home isn’t a decision to rush into. Our experts are on hand to guide you towards the best options for your circumstances, so call us today on 0345 505 1200 to find out more about buying a repossessed house at auction.
Written by: Edward Feather on 3rd November 2022
Edward is an experienced property auctioneer with over 15 years' property auction experience and considerable knowledge of the North West property market.
Edward joined Pugh & Co in September 2018 from SDL Auctions in Chester. He was also a Director at the Cheshire and North Wales franchise of the Auction House business, based at estate agent Humphreys in Chester, before its acquisition by SDL in 2016.
