The lack of funding available for home buyers at the moment means that first time buyers have to be ever more creative in their quest to get on the property ladder.
Some may be able to tap into the ‘Bank of Mum and Dad’ to get that elusive large deposit for their ideal first home, while others are looking at alternative ways to buy less-expensively to minimise their lending, for example buying at auction or purchasing a repossessed property.
Buying via these routes have certainly risen in popularity, and while they used to be reserved for cash-rich investors eager to make a fast profit, we are now seeing novice buyers entering the arena.
While the rewards and savings can be high, the process of buying a home in this way could be beset with problems, so it’s always advisable to get professional advice first.
Let’s take buying a property at auction. This involves buying a home at speed and typically a buyer has 3-4 weeks before the auction to research the property.
Once you have identified the properties you are interested in, request the legal pack from the seller’s solicitor. This includes legal documents so it’s important to get this pack reviewed by a property solicitor first in case any costly issues are identified.
This is the most critical stage because once a sale is agreed, there is no going back, you must complete, usually within 28 days.
Doing your homework is also advisable when snapping up a repossessed ‘bargain’. This opportunity is becoming more common with first timers and investors, particularly in the Wigan borough, which was recently branded one of the country’s repossession hotspots.
It can be hard to find a repossessed property advertised, and very often their low-price means they sell quickly after going on the market, so strike up a good rapport with your local estate agent and they will be able to spot opportunities for you as soon as they arise.
Bear in mind that the home is being sold to make the best possible return for the mortgage lender who repossessed it from the previous owner. After you make an offer on the property, it will be advertised in the local Press and other prospective buyers then have the option to put in a higher offer.
It’s a risky process as you could end up being out-bid, so it’s important to put yourself in the best possible position before you make your offer. Line up your funds beforehand and select a conveyancing solicitor with experience in dealing with these purchases, because the lender will not only take into account the amount you are offering, but also your ability to exchange contracts quickly and have the right funding in place.
Also consider that a repossessed home was owned by someone in financial difficulty so it may not be in the best condition; be prepared to get your hands dirty after you sign on the dotted line.
We can help buyers who are considering buying a repossessed home or through an auction, contact our residential conveyancing team on 01616 966 229 for assistance.
By residential conveyancing solicitor, Tom Bridge
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