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A brief guide to buying repossessed properties

Repossessed properties are homes that have been seized by a bank or other lender after a homeowner has defaulted on a mortgage or other financial agreement. The new home owner will often seek to quickly sell the property to recoup the money that was defaulted.

There are obvious benefits that come with buying a seized property, but potential pitfalls also exist. If you are looking to buy a repossessed property, you need to understand the pros and cons of buying repossessed properties.

Pros of buying repossessed properties

Some of the main pros of buying repossessed properties include:

  • The seller is usually motivated to get a fast sale, which gives you increased bargaining power and opportunity to achieve a below the market price purchase
  • The seller is likely to do repairs to get a good, quick sale, although this is not always the case
  • The seller is likely to provide major concessions like closing cost credits, although this is not always the case
  • You may use regular mortgage financing to buy repossessed properties

Disadvantages of buying repossessed properties

The main disadvantages of buying repossessed properties include:

  • The seller will likely not able to negotiate a price that falls below the outstanding mortgage debt
  • In the case of bank owned property, the bank will usually require additional paperwork to make a sale
  • Banks may also not agree to do any repairs or provide disclosures as to the condition and history of the property on sale
  • Moreover, the property may still be occupied when you purchase it, which means you have to wait for the occupants to move out
  • Heavy refurbishment may also be necessary because previous occupants are likely to strip out all fixtures and fittings before they move out and finally hand over the keys.

Where to find repossessed properties on sale

Finding a repossessed property on sale is a lot like finding a standard home on sale in the open market. You will need to do a good deal of scouting around. You will also need to get your credit records in order and have enough money to put a down payment. Online property auctions like allsop.co.uk, barnardmarcusauctions.co.uk and whitehotproperty.co.uk are popular shopping grounds you can find repossessed properties on sale.

Remember, buying repossessed properties can be a steal of a deal. But, just like with a regular mortgage, you need to do your research properly before you make any purchases. Thorough research before making purchases will ensure you get good value for your money and avoid nasty surprises down the line.

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