A repossessed house is one of the risks of having a mortgage. Being late on the payments or missing them out give your mortgage company the right to repossess your home and sell it to the biggest bidder, to recover your debts and get their money back.
This aspect will probably result in a property cheaper than the market value, but not at the highest standards either. A lender is in a rush to get the money back, which means no improvement work will be done to the house, structural or cosmetic. The previous owners might decide to take with them whatever can be carried, which means a half-furnished house or an empty kitchen. Any necessary repairs will be delayed until a new owner is found, so the bargain might not be a bargain after all. With a price of 30% less than the market, but with investments needed, you might end up spending even more than with a purchase of a new building or full payment on a fully priced house.
There are two ways to buy a repossessed property: on websites/through an estate agency or at an auction.
Though most of the times, the agency does not advertise a property as repossessed, vague details and a lower price than the average market can get you an idea about the house status. Visit the closest estate agency and ask them about any repossessed properties they are dealing with at that moment
Get an auction catalogue, visit the properties you are interested in, go to an auction and get yourself a property. You have to be 100% sure that you want the property, because once the gavel is heard, there is a contract between the seller and you. A contract you cannot back out from.
The conveyancing process for a repossessed property is more complicated than for a conventional one, including your real estate agent putting a “Notice of offer” in the local newspaper, giving other bidders the opportunity to get involved. The lender will take the bigger price, so the risk of gazumping is high. This means that after all your efforts, someone can overbid you with as little as £1000 and make the deal.
On the one hand, purchasing a repossessed property might be a bargain, with a low price and a fast conveyancing process, but on the contrary, the risk of gazumping and unknown necessary repairs will raise the costs more than expected.