Let’s get straight to the point, you know Repossessed Houses & Distress Properties that are for Sale offer lots of potential for your property investments…
But the secret is in knowing how to find them right?
Below I will show you how….
Dealing With Mortgage Companies
Mortgage companies often try to hide the fact that they are selling repossessed houses as they feel it may devalue the property and lead to a lower sale, often also known as below market value houses.
This is misguided though in my opinion as often when buyers know it’s a repossession it can generate a lot more interest and push up prices (good old supply and demand)
But until mortgage companies have a change of heart it can be difficult to spot which sales are repossessions unless you know where to look.
This is where I would like to help you and give you the upper hand in your property search, to help guide you on how to find repossessed properties for sale.
Mortgage companies will either choose to sell the properties in one of three ways…
1). Estate Agents
2). LPA Receivers
3). Auction Houses
As a rule of thumb most individual repossessions that were once owner occupied will be sold by estate agents.
Most portfolio properties that were on buy to let mortgages and owned by landlords will be sold by LPA receivers.
And finally auction houses tend to pick up all of the properties that fall between the cracks and can’t be sold for a suitable price using either an Estate Agent or an LPA receiver.
This is because auctions all being fair and equal are the best way to show that a mortgage company has tried to sell the property for the best price and given it the best opportunity to find a buyer, after all they just want to cover their backs and clear the debt.
For the purpose of this blog though, as buying properties at Auctions and through LPA receivers is more specialist than the average investor may want to try, I will only concentrate on estate agents here, but I wanted to mention the others so you know all the avenue’s to look at, if repossessed properties and distressed property sales is definitely what you’re looking for.
Dealing with Estate Agents
When I used to work for an estate agent in 2006-2007 we dealt with quite a few repossessions. The script was always the same, ‘Don’t tell any buyers it’s a Repo’! … was the message passed down from the bosses.
So as an agency we were to market it as normal and conduct viewings on it as normal.
This is all well and good until you get to the property and you have to explain why the windows have boards on (note: not all repossessions do, so keep a look out for other tell tail signs), the toilets and sinks have what looks like police tape across them saying ‘do not use’ and the place looks like a ghost scene with personal items left throughout the house but the feeling its clearly not lived in.
It’s a weird feeling and quite eerie, and pretty hard to explain to interested viewers without them asking the question…. is this a repossession?
You see, mortgage companies aren’t hands on with repossessions. They have to be seen to get the best possible price, but there not experts in selling houses, there just finance companies, so they like to pass the buck on to the agents to do all the work. But then they tie the agents hands throughout the whole process stopping them from doing their work properly.
Which leaves trails or ‘signs’ that the property is indeed a repossession that is very difficult for estate agents to hide.
Some properties are more obvious than others, but if you know what you’re looking for then it’s easy to turn detective and spot the signs, and then finding repossessed properties for sale in your own town becomes much easier.
How To Spot A Repossessed House is for Sale
There’s two main avenue’s to spotting repossessed properties that are for sale and the first starts before you even get to the viewings.
As the mortgagee (mortgage lender) needs to be seen to achieve the best possible price (as they are legal bound to), they always invite extra bids on a property once an offer has been made, until the sale exchanges.
This can be infuriating for buyers (and agents) as it can slow down the process, can often cause sales to fall through and doesn’t always lead to a better price.
But I’m afraid it’s all part of the game that needs to be played when you’re buying repossessions through an estate agent.
As part of this process therefore the estate agent is often asked to put an advert in their local paper and on the property listings (on portals like rightmove.co.uk and zoopla.co.uk) – an example below
So the first role in spotting repossessed houses for sale is therefore in checking your local property listings online for wording similar to that above, and checking in your local papers for ‘public notices’.
If your based out of the area that you want to buy in and you don’t know which are the local papers, then it’s worth calling up the estate agents in the area, and ask, which paper they list their public notices/final offer notices for repossessed houses for sale?
Or check out this newspaper website which lists all of the local papers for the country, and contact the papers direct to see if you can get regular copies or check their online editions.
The second avenue to spot repossessed properties for sale is when you’re actually out viewing – or if you’ve got good eye sight you can sometimes spot these signs in the pictures on the property particulars
These signs (in no particular order) are:
- Metal grates or wooden boards on windows and/or doors
- ‘Do not use’ tap on plumbing items as the water has been drained down to prevent leaks
- Chattel Notices in the window giving owners notice to collect personal belongings
What Happens Next?
Now you know where to find the repossessed houses in your area, and what to look for, it’s a case of getting out there and start viewing.
But be careful as not all repossessed properties are gems. Here’s a blog post I have written on how to spot the pitfalls of repossessed houses for sale uk.
Or if you would like help in finding your next buy to let investment or building a property portfolio, then take a look here at how I can help save you time and make you more money with your investments.