Case Study – First Time Buyer Buying a Repossessed Property
A repossessed property, otherwise known as a ‘corporate client’ property, is usually advertised through an Estate Agent on behalf of a company that deals with the sale of property on behalf of lenders or banks whose clients have defaulted on mortgage / loan payments.
How can you tell if a property is repossessed? Well, when looking at pictures of a property for sale on websites or when going to view a property if you see red and white tape wound round taps, toilets, baths, boilers and fires this usually means that the water / gas supply has been turned off for safety reasons and is typically an indication that the property has been repossessed.
This means that you end up dealing with a faceless company through the Estate Agent; you do not get to speak or correspond with the ‘corporate client‘.
Our client was a first time buyer and as such was not experienced in dealing with Estate Agents let alone a faceless corporate client.
At the outset he did not know how much he could borrow but had a maximum figure for his monthly mortgage payments.
So when we first met we calculated the maximum mortgage that lenders would lend him and what the monthly mortgage payments would be. By adding his deposit to the maximum mortgage available we knew his maximum purchase price would be £100,000 and the mortgage payments would be within his stated monthly budget.
After looking around much of Manchester and viewing properties he could not find anything he liked. At Manchester Mortgages we always try to offer a bit more than just mortgage advice and so we also researched properties for sale in the area he was looking for.
We spotted a property for sale through a corporate sale at £90,000 and informed our client. He told us that he had already viewed it a few weeks earlier but the Estate Agent advised him that an offer of £105,000 had been accepted and the sale was proceeding.
As our client’s maximum price was £100,000 he dismissed and forgot about this property. He was surprised to learn that the property was still on the market and wished to make an offer of £95,000 but lacked confidence speaking to the Estate Agent.
We contacted the Estate Agent on our client’s behalf and discovered that the sale at £105,000 had fallen through but other offers of £90,000 & £92,500 were being considered by the corporate company. We therefore put forward our client’s offer of £95,000 backed up with a Decision in Principle from the chosen lender and proof of deposit from the client. A few days later his offer was accepted.
In must be borne in mind that in these circumstances the corporate company will not allow the Estate Agent to withdraw the property from sale and will insist it is still marketed until exchange of contracts which means the client has to take the risk that no higher offers are received and accepted and also the seller will normally expect the purchase to be completed within 28 days of the offer being accepted.
With this in mind the mortgage application was submitted the same day the offer was accepted with all paperwork required by the lender to ensure that there were no delays – we also checked with the lender that they were up to date with processing applications as some lenders can take 3 to 4 working days for applications / amendments to be accepted.
With the chosen lender for this mortgage we were able to speak direct to the processing team and therefore within 24 hours of receiving the application the lender instructed the valuer to arrange for the valuation of the property which took place 3 days later.
The property was duly valued at £95,000 and the lender issued the mortgage offer less than 7 working days after receiving the initial mortgage application.
We recommended a solicitor to our client who was made aware of the timescales and they promptly obtained the searches required, corresponded with our client and the sellers’ solicitors and drew up contracts.
The exchange of contracts took place 3 weeks after the offer was accepted therefore securing the purchase for our client. Completion took place one week later.
Arranging mortgages and liaising with other parties to purchase a property can be very stressful. With our years of experience in arranging mortgages we are happy to speak on your behalf to Estate Agents, Solicitors, Builders etc to ensure your property purchase or re-mortgage is as straightforward as possible.
Manchester Mortgages is a trading name of Mortgages 4U (North West ) Limited which is authorised and regulated by the Financial Conduct Authority (FCA register number 301076). Registered in England & Wales No. 4729252. Registered office: 7 Randale Drive, Bury, BL9 8HZ.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.