Repossessions

A repossession generally happens where the purchaser of a property has financed the purchase of that property using it(the property) as security for the loan and then is unable to repay the monthly installments to the lender. The loan would normally be known as a mortgage.
When the repossession occurs the lender will gain legal right to enter and take possession of the property, they would normally then change the locks and turn off the services, gas, electric, water, to the property, making it safe. Indicator tape will normally be placed on boilers, taps etc. to indicate that they are out of use.
Once they have possession of the property they would normally seek to sell the property as quickly as possible for as much as possible. This would normally be a compromise and for a quick sale they may put the property through a property auction. Property auctions are held throughout the UK and can be a good place to find a property below market value(BMV). Repossessed properties can also be sold directly from the lender or through specialist companies or solicitors acting for the lender.
The number of repossessions has risen dramatically over the last couple of years rising by almost 300% over the last 3 years. In 2005 the figure was around 800 in the first 6 months and in the first 6 months of 2008 the figure has risen to over 3000. This is a clear indicator of the way the housing market is heading for at least the next year.

A recent purchase that we were involved in in Hazel Grove, Stockport(Cheshire) for a repossessed house at a negotiated price of £114,250 still left a further £58,000 to be recovered by the lender from the borrower, this does not include the legal and other expenses that were also incurred. Clearly the original borrower had overextended him/herself financially and also ended up in a position of negative equity which meant that it was difficult to sell the property through normal procedures to attain a good price and it becomes a distressed sale. The property then was bought by us direct from the lender, we invested a few thousand pounds into it to redecorate and then rented it to a small family. The capital invested will be recovered when the property market picks up possibly through a re mortgage, there should also be a good return on investment.