How To Find Repossession Properties To Buy 🏚

Repossessed properties (also known as repo homes) can be an easy way for property investors to get below-market-value deals that go through quickly, but there are some risks involved. 

You can also look for signs that a property is a repossession property and there are a few different ways to find these properties so you can bag these bargains. 

Here’s a quick overview of the advantages and disadvantages of buying repossession properties as investment properties (we go through them in more detail later in this post).

Advantages

Quick

No chain

Below Market Value

Disadvantages

Gazumping

Sunk costs

Bad Blood

Clear Out Costs, Foliage, Damp

Signs That A House Is Repossessed

If a property is a bank repossession property there are some telltale signs.

  • Tape over appliances, fixtures, sinks, loos that says “do not use”
  • Boarded up windows 
  • A sealed letter box to stop any mail from entering the house
  • Adverts for “we have received an offer on this house”

If you see any of the above on a property listing then there’s a good chance the property is in repossession.

Even if it’s not there’s a good chance you could do a decent direct-to-vendor deal with a tired landlord.

Where to Find Repossessed Properties

Rightmove and Zoopla

Repossession properties can be found on popular property portals in the UK just like any other property, but you need to know what to look for. 

They won’t always be obvious but there are some telltale signs.

Often with repossession properties, there will be an advert for the listing in local newspapers or online property portals saying something along the lines of the following:

“We have received an offer of £xxx,xxx on this property, if you would like to submit a higher offer please do so by xx/xx/xx ”

This happens because the estate agent has to be seen as trying to get the best possible price for the lender and they will entertain offers up until the exchange date.

It will often say “Public notice” in the listing.

Auctions 

Since lenders want to recoup their costs quickly, auctions are often where repossession properties can end up, sometimes straight away but normally after being on the open market for a bit. 

Look out for the signs mentioned earlier to find the repossession properties.

In addition, you may also see the following wording on auction listings

  • ‘by order of the receiver’
  • ‘by order of the mortgagee’
  • “public notice”

This is the wording typically used when it is a repo property.

Check out local auction houses or you can check online auctions like the following:

Estate Agents

Estate agents won’t necessarily openly advertise properties as repossessions, but if you call up and ask them if they have any available at the moment they’re likely to let you know what they have available.

They need to sell these after all. 

Online Tools / Subscriptions

There are some online tools out there that claim to be able to list repossession properties from the big portals at a fraction of the time it would take you to manually search for them.

In essence, these tools will be doing the same kind of searches that you would be doing, except automatically and much quicker than you could do them manually.

Direct to Vendor

What if you could manage to get these repossession properties before they even hit the open market?

If you see some rundown-looking properties that are boarded up it could be that the house has been vacant and the previous landlord is having to make mortgage payments on it but without tenants. 

This can lead to them falling into arrears and moving towards repossession. 

Rather than being repossessed, they would much rather get a sale from the property. 

You can either post a letter through the letterbox showing your interest or if that’s not an option you can send a letter directly to the landlord. 

To do this you’d need the landlord’s address details and can do this by downloading the title register of a property if the landlord is the freeholder or leaseholder (which they should be). 

It costs £3 to do this through GOV.UK. 

There are also lots of other ways to find direct to vendor (D2V) deals.

Related Reading: How to find direct to vendor property deals

Advantages of Repossessed Properties

In short investors like repossessed properties because these deals are:

  • Quick
  • No chain
  • Below Market Value

Quick Turnaround

These properties need to move quickly and a standard time is 28 days from the offer being accepted to the exchange of contracts.

This is a lot quicker than most property transactions in the UK which can drag on for months and months. 

No Chain

Since it’s in the lender’s ownership there’s no chain, so there’s less chance of things falling through because you’re not relying on the owner having to find another property to move into.

Below Market Value

The main advantage of repossessed properties is that you can get them below market value since the lender’s main aim is to get a quick sale and recoup their costs (which is the remaining mortgage balance). 

Since you can get decent discounts on these types of properties, investors can get better ROI on these properties and lock in future positive equity at the point of sale.

Risks of Repossessed Properties

Even though it might seem like repossession properties can be a way to find good value deals, there’s a fair bit of risk involved.

Gazumping

Ga-what?

Gazumping. I don’t know how this term became a thing. 

But it’s basically when you put an offer in, it’s accepted, everything is going smoothly and you’re slowly getting toward your exchange date.

All of a sudden the buyer accepts a new higher offer from somebody else.

You’ve been gazumped.

This is more common in repossession properties because the estate agent has to be seen as getting the best offer possible for the lender. 

I mean agents will literally say “We’ve received x offer, please submit a higher offer before x date if you want it”. 

Sunk Costs

If you’ve made an offer and paid for surveys and some legal fees already, but then you get gazumped, you’ve basically lost all that time and money that you’ve already put into the deal. 

Annoying.

Bad Blood

Not surprisingly when a property gets repossessed the previous homeowner can be a bit annoyed with the whole situation.

Some people can let this frustration go a bit further and they end up trashing the place.

This can be anything from making a bit of a mess to cutting wires in hard-to-find places.  

Clear Out Costs, Foliage, Damp

If a repossession property has been on the market for a long time it means it’s not been looked at or dealt with for a long time. 

This can mean that foliage gets overgrown, and if you’re unlucky you have a Japanese knotweed growing out of control.

It may also be that there’s a damp problem in the building, but if the property is sat for months on end with nobody looking at it, a small damp issue can end up being, well, a big damp issue. 

Of course, these kinds of things you should be aware of if you view the house before offering anyways. 

Further Reading

If you want more ways of finding cheap deals, learn all the ways of finding below-market value property deals.

While repossession properties are a good way to find motivated sellers, finding reduced properties on Rightmove is another way to find potential property deals.

Or if you’d rather outsource the work then you probably want to find a deal sourcer to do the work for you, but check that you’re happy with the fees for using a property deal sourcer.