Auction & Repossession Property Lists – A Guide for Landlords by Letting Focus

Many people think that the only way to buy a repossessed property is via an auction.
But the fact is that the vast majority of repossessed properties go through an estate agent first. Indeed, they only go on to auction if they fail to sell via an agent.
In my opinion, especially for those who need mortgage financing to buy one, it is a lot less risky for a buyer to find which estate agents handle repossessions (they don’t all do so) and then go and do some viewings and put a cheeky offer in with the agent.
The problem with buying repossessions at auctions is that at an auction you can get outbid so easily, and if you are, you can kiss goodbye to the cash you spent on your survey valuation fee and the legal costs you have already incurred.

Estate Agents and Repossessed Properties
Dealing with an estate agent, is in many ways so much better because the agent is bound to pass the offer on to the mortgage co who is repossessing and often the lender will accept low offers.
And whilst lenders usually insist that estate agents keep on marketing a repossession up until exchange, in practice I know that most stop effective marketing once they have found a good buyer (especially given the fact they don’t earn much from mortgage cos for marketing these repossessed properties)
In my opinion, auctions are great for residential property providing, 1) you are happy to buy a wreck or something that needs a bit of work doing on it and / or 2) you don’t need a mortgage.
They can be good for more standard properties when the property market is down on its proverbial bottom but the wider market has not cottoned on yet - as during the period from September 2008 to February 2009.
For all other periods of time and type of situations, you need to get out there and play hard ball with estate agents or source motivated buyers using your own efforts.

Repossession Lists
Oh, and still on the subject of auctions, now and again I hear some supposed expert claiming that for a few pounds you can get access to Repossession Lists from mortgage lenders before anyone else does.
Using this mythical list you can, of course, get in first and get these “below market value properties” for a song.
You may a s well send £30 to Prince Whatever who emailed you today from some dodgy state somewhere in return for which he will supposedly send you a load of money from his currently frozen account in Switzerland.
The fact is that Special Repossession Lists are as rare as a straight man who likes “Sex and The City” – which is to say, they are actually non existent.
Mortgage companies repossessing properties are legally bound to get the best price for the property they are repossessing.
As such they have to be squeaky clean about how they do it – and this means they have to do widespread marketing - which usually means marketing through estate agents first.
There are no secret lists – only people after your money.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the buy to let experts and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
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At LettingFocus we offer independent unbiased advice for landlords and property investors on a one to one mentoring and coaching basis as well as occasional group seminars.
Property clubs are property advice is still mainly unregulated.
As I am not linked to a property company, developer, estate agency or bridging loan provider I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.
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Real Evidence property prices have turned says LettingFocus.com

Cripes property prices seem to be turning up a bit in our part of London, at least for family type houses in average nick, which is not good news if you, like me were hoping that low prices would be around for a while.
To give you an example of this I had my beedy eyes on a nice two bed house for a first time buyer client in SE London back in January 2009 which was up for sale by a big landowning estate.
All it needed was £3K in basic redecoration. It would have been lettable right away at a rent of at least £900 per month or the guy could have lived in it himself.
Over Xmas, when all around was doom and gloom, it was actually marked down to £200K from £225K but this time around I was just too cheeky and went in too low at £185K. (I blame THE BOSS for the over-cheekiness!)
But the seller wasn’t budging and he put it on at a property auction in late January where the property fetched 195K, just over the £185K reserve price.
Since then the general economy and the state of the property market has started to look at lot rosier so the buyer put it back on the market in late April - in exactly the same condition - and has just sold it through an estate agent at £245K.
The investor probably paid cash at the property auction which will give him a profit of at least £40K after costs and an allowance for the opportunity cost of his own money.
So good luck to that property investor and well done to him.

PROPERTY AUCTIONS – WHY I AM NOT THEIR BIGGEST FAN
Now I have to say that I am not the biggest fan of buying property at auction and this is usually because… 1) Most times I am not a cash buyer and 2) Most of the property I see coming up at auction is rarely freehold property in anything like a decent condition. (I only buy leasehold flats that are self contained, in good condition and with a good management company where the directors are also the leaseholders – these can be pretty rare especially at auction.)
Property auctions always have lots of run down flats with poor management and duff leases. Where freeholds are for sale they are usually “building projects” (which I don’t have the time for right now.)

IF YOU NEED A MORTGAGE YOU ARE AT A DISADVANTGE AT A PROPERTY AUCTION
However, that property (the one that sold at auction at which sold at 195K) was unusual because it was a freehold house that needed not much doing to it.
Trouble is I didn’t want to chuck half a grand on a banks’ mortgage valuation just to be out bid at the auction.
And that is the trouble with auctions because at a property auction it is much better if you are a cash buyer.
So, I lost out on a chance to make £40K (or if it has been me buying, to get a great rental yield and a super investment)
Never mind, it all ended OK for me.
I went on to buy a similar property just down the road in better condition via my old trusted estate agency route for about the same money - £203K – so honours even on that one.
If you see the potential in flats or building projects and you want to go down the auction route and buy property this way take a look at my article Property Auctions.

WHAT DOES YOUR CREDIT FILE SAY ABOUT YOU?
Apparently, record numbers of people are checking their credit files to find out exactly what their credit record file says about them.
No doubt, the prompt for this is the fact they are all of a sudden being turned down for credit by our newly tight fisted banks and building societies.
Read my article; Checking Your Credit Record for more on how to check your file.

HOUSE PRICES
Finally, on the subject of house prices again, it always amuses me how when commentators talk about this it really gets people incredibly worked up.
Even more worked up than a bunch of guys discussing the England football team. Ok, well not quite that bad.
You can see this from all the vitriolic comments the big papers get in their online edition whenever the subject of the direction of house prices comes up.
Well, as you know, I have stated my colours firmly to the mast.
I think prices of family houses in the range £200k – 600K in London and the South East and many other parts of England and Wales have reached the bottom or near enough.
(Of course another Fred Goodwin type cock up or a flu pandemic will put the tin hat on any increase in prices, but these things are impossible to predict and if you don’t like risk you should stick with National Savings index linked certificates instead of property!)
In my work as a Property Finder I am certainly getting a lot of work right now from people who need help buying in the right areas. And that is a sure sign that people think property prices are going up.

LANDLORDS SUFFFERING SAY THE MEDIA
Mmm, I’m not so sure about that one.
Even if rents were down 20% on the year (which they aren’t for the type of property I buy), as most landlords existing mortgages are down about 50% following big cuts in interest rates, unless I’m “Mr. Dim at Maths” that surely means more profit for landlords?
Unless you have to sell now of course and therefore cop a potential capital loss. However most landlords are in it for the long term so won’t be uduly worried by rents that are down a bit.

AM I RIGHT YET RAY?
About 3 years ago I predicted that the proportion of let property could hit 25% by 2025 (unless the regulatory and tax environment facing landlords changed significantly). A leading commentator said I was naive. Well Ray, as the proportion of property that is let continues to increase rapidly to almost 13%, maybe you might still owe me a drink come 2025.

DON’T SHOOT THE PRESIDENT
I don’t normally do politics but Obama is such a breath of fresh air after the previous incumbent especially on foreign policy that I think some credit for the economic recovery must be attributed to him.
Partly, this must be down to the fact that his words, if translated into action, will certainly make the world a much fairer and safer place for us all. I just hope that some nut case “No Surrender” settler in Israel hasn’t got the poor man in his sights.
More on politics... will someone please get rid of that awful BBC political correspondent -the chappie with the glasses. You're not the news, Mister!
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book. The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, landlord registration and capital gains taxes.
I’m a property expert and property speaker - and I run the well known property blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting to anyone looking to buy property for themselves or to let.
What’s unique about lettingfocus.com is that we offer independent unbiased advice on renting out property because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier.
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Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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How to Get a Good Deal at a Property Auctions - Part Two by David Lawrenson of Letting Focus

Right now it looks like I will have to wait a little longer for some good property buys to come along from London’s estate agents so I have been to a few auctions instead to see what is going on there.
Sure enough, as stated in last week’s blog, lots of lenders are still being too greedy and chasing after too much money.
For example, at the auction I went to in London’s West End on Monday, which was packed with what looked like mostly experienced investors and developers, many lots DID fetch a fair price.
However, for those properties which had been repossessed and which were being sold by mortgage lenders, the greedy mortgage companies were still seeking too high a “reserve price” which in many cases, meant the properties failed to sell on the floor of the auction.

SO HOW CAN YOU GET A GOOD PROPERTY BUY THESE DAYS?
Well, auction is one way.
The best deal I saw was a property sold by a private seller, which had assured shorthold tenants in it.
It sold at the auction for £90,000 despite a guide price of £110,000.
Similar properties in this well maintained block go for at least £145,000.
Clearly, the seller was keen to sell (who knows why?) and must really need the cash because the property is supposedly renting for £8,100 per annum – a gross yield of 9%. Not bad at all when you think what you get at the bank right now.
But whilst this looks good, on this property you were buying the property with the tenants in situ. Some auction pros I know highlight the dangers of this – falsified tenancy agreements and the like.
So, yes there are dangers. But even if the tenants did not pay a bean in rent until they were evicted 6 months down the line and even if they took the kitchen, the bathroom fittings and did a “Dirty Protest” in the flat, the most it would cost would be £4K in unpaid rent and up to £15K to refit – which would leave the investor in the money against similar properties.
Access was not possible on this property ahead of auction – the tenants were not playing ball apparently – though £10 to the tenants for a wee mooch around might have been welcome by them to spend on who knows what.
Yes, buying it would have been a risk – you could end up with crack addicts as tenants. But that is the nature of property auctions, which is why first time buyers and first time landlords are rarely seen bidding at auction houses.

OFFER
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It is well worth taking a look at their site and signing up for their information service. Sign up by speaking to Julian on 01737 232 284 or email him at juliant@eigroup.co.uk to receive 1 free month on top of the 6 month subscription or 2 free months on the 12 month subscription. You’ll need to quote “lettingfocus - Julian”
Read our guide to Buying Property at Auction
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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer, property speaker and I run this well known property letting and investment blog
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for anyone looking to buy property for themselves or to let out.
In my work as a consultant I help private individuals with any aspect of buying property or buy to let. What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
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You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week.
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Good deal on repossessed property at auction by Lawrenson of LettingFocus

Years ago, buying property at auctions was the preserve of a few professional investors and builders. However, more and more people (and financial institutions) are now both buying and selling property at auction, so that today the volumes sold are approximately three and half times what they were 10 years ago.
Around one eighth of all residential property sold at auction is now a repossession and about one eighth of all repossessed property eventually finds its way to the auction house.
But can you bag a bargain at an auction and what do you need to know?
Well, the first thing to remember is that the auctioneer’s client is the vendor, not you. In this much he is just like an estate agent whose duty is to get the best (read highest price) for the client.
However, whereas some estate agents will often let slip information on what price the vendor will accept, you are not likely to get any such tips from an auctioneer.
Remember too, that you will be in a room competing with other buyers and the auctioneer will be doing all he can to squeeze out an extra five hundred pound from the bidders.

Repossesions Are On the Up
All auctions are seeing a big rise in repossessed flats which were bought off plan by would be investors.
Many of these investors bought the flats with rental guarantees from builders or via property clubs, often on 2 or 3 years fixed rate mortgages taken out in 2004 or 2005.
With the rental guarantee ended these landlords were left competing with hundreds of others for a limited tenant pool. They were also facing having to remortgage at higher borrowing costs.
As an example, at a recent auction, a two bedroom flat in SE London, which had sold at £250,000 in 2005 was put on at a reserve price of £175,000 but still failed to sell.

Check with Estate Agents First
Most repossessions will be marketed at estate agents first and only then come to auctions, so it’s always worth keeping in with the agents who handle repos (not all do) to see what’s coming up there first.
So, there are always good deals on offer especially on these oversupplied me too city centre flat. However, with the dearth of tenant demand, you have to ask if they will ever be a good investment.
At auction, you and your conveyancer will have had to study the legal pack, do your viewings and survey, arrange the finance and insurance in principle before the fall of the gavel.
You’ll also have to pay 10% of the purchase price right there at auction and you must also normally complete within 28 days though a seller may allow you longer. You will also have to pay the auctioneer’s fees - usually 2.5% plus the stamp duty.

Ten Tips for Success at Auction
Go to a few auctions first before you bid. Understand how it works and feel comfortable.
Ask for the package compiled by the auctioneer at least 4 weeks before the auction. Get your conveyancer to study it carefully. Look at the contract, the title documentation, the searches, whether there is any outstanding planning or environment issues etc and replies to general enquiries.
On the day of the auction, arrive early; check the “addendum” and the legal pack in case anything like special conditions have been added.
Keep cool and stick to your maximum price.
If you go with a partner, sit together as it’s been known for partners sitting in different corners to bid against each other! B
The auctioneer, vendor or their agent can bid up to the reserve price without identifying themselves. It’s called “off the wall” or “imaginary” bidding.
If the sales details quote “unless previously sold” you should be able to approach the auction house and make a bid in advance of the auction. If it’s accepted, you’ll still need to move fast and ensure finance is ready and conveyancing can be done quickly.
If the property hasn’t met its reserve, the auctioneer will normally tell you what the reserve is and advise if he has the vendor’s authority to sell at the reserve price for up to 24 hours after the auction. This can be a good way of snaffling bargains.
Forthcoming auctions are advertised in local newspapers, as well as on the Internet or in the Estates Gazzette magazine.
Get real! Don’t come expecting to buy a £300,000 place for £150,000. However, you may well bag one for £270000 or even a shade less.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property investment experts.
I’m, David Lawrenson, the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book.
What’s unique about LettingFocus is that I offer independent unbiasedproperty networking seminars covering property investment and letting because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to make sure you get tenants who are going to pay the rent and how to manage a rental property to make money.
I can also comment on “No Money Down” Schemes and “Buying Below Market Value” methods too.I can answer all your questions on letting property because I have been a landlord and property investor for over 25 years.

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