My Personal Experience Of Property Auctions!

Repossessed properties often sell at £1,000's below their market value. And there are just as many repossessions now as there were in the 1980's! You could pick up a bargain too if you know where to look and what to do. This is your need-to-know information...

1. Understand how the repossession process works. Properties are repossessed when a borrower stops paying the mortgage and the lender cannot recoup its money in any other way. Repossessions still take place even when property prices have been rising. Borrowers sometimes over-borrow, lose their jobs, split up from their partners and fall ill. A lender who has repossessed will sell in one of two ways - via an estate agent or through an auction. They have a duty to get the best possible price for a property - or at least be seen to be trying. There are no secret lists so don't buy any that are advertised. The bottom line js that most lenders aim to cover the outstanding mortgage plus costs. They are not aiming to help the borrower. Repossessed properties can and very often do sell at below market values - especially if they can be sold quickly. Properties standing empty fall in value fast.         

2. Identify a repossessed property selling via an estate agent - look, listen and ask questions. Most estate agents are coy about a repossession. They don't want silly offers. Look closely when viewing - if the property is empty, has overgrown grass, furniture left behind, signs of damage and/or lots of post, this may be a repossession. Listen to what the estate agent says - most will be vague about the seller. Ask outright! Talk to the neighbours; how long has the property been empty for? The longer the better - empty properties are at risk from vandals. If you can move fast, a low-ish offer may be accepted. How much? Find out when the previous owner bought (by talking to neighbours, checking electoral rolls etc). Talk to estate agents to gauge the value then. That's probably the highest possible mortgage that needs to be cleared - a good offer!     

3. Uncover repossessed properties at auction - look for 'by order of' and 'mortgagee in possession' in auction catalogues. Many repossessed properties are sold by auction as the lender wants a quick sale. Estate agents may auction the odd property but most go to specialist property auctioneers around the country. Phone auctioneers near you for catalogues. Identify repossessed properties - view, arrange finance, survey and attend to legal matters as you would for any conventional purchase. You can either make a pre-auction offer or go along and bid at the auction itself. Attend one or two in advance. Talk to auctioneers' staff. Watch what happens. Set a maximum bidding figure. Base this on the property's market value, less your costs (mortgage, survey, legal fees, repairs, etc) and your target profits - assuming you are buying to sell on!             

4. Spot a repossessed property you may have missed - study classified ads in your local press. Tucked away amongst legal notices, you'll occasionally see what's called a 'notice of offer'. This is a formal notice that confirms that the lender has received an offer of a specified amount for a particular property; typically, a repossessed one. It then invites higher offers by a set date; usually no later than 14 days following publication. These notices can offer you a money-making opportunity. View the property. Do some research to decide what it's worth - talk to estate agents, view comparable properties, and reach a figure. You can then decide whether you want to come in with a higher offer. Even if you do not, it's worth making an approach to establish contact with whoever's handling this sale. They'll be a useful contact for you later on.       

5. Do the best deal - be ready to move fast. A quick sale is important to the lender. If you're making an offer via an estate agent, make sure you can do everything (finalise finance, arrange a survey, handle paperwork) within 28 days. At auction, you must have a deposit (10% usually) to pay on fall of hammer. You must have sorted all the survey, legal bumph etc in advance, with rock-solid finance to settle within 28 days. A survey is vital - the fact that a big-name lender is selling doesn't mean it's a perfect property! Check what fixtures and fittings are included. Check everything is in working order. When moving in, bear in mind that the previous owners probably had financial problems. These will not reflect on you. You'll feel re-assured by telling the two main credit reference agencies (Experian, 0115 976 8747 and Equifax 0990 783783) that you now live at this address. Have a letter confirming your ownership from your solicitor that you can show to anyone who is looking for the previous owners. Sit back in your cut-price property and decide how you'll spend the £1,000's you've saved!