Do repossessed homes sell for less?
You used the UK term for when a lender deals with a mortgage default. Not sure if you are talking about the UK or just used the term. For the US and the UK a distressed sale can result in a sale price that is lower. It might be because the property has become run down so the price is fair based on the condition. Or it could be that the house sells for less given conditions of the sale. In the US all bidders at the auction have to be cash buyer and close almost immediately. Hence there are fewer people who can bid. In the UK you have a limited ability to conduct a survey after winning so you either spend the money up front or take a risk. In any auction situation people have bid more than the property was worth. There can be issue with the title in the US in that the sale might be for a lien that is junior to other liens. Liens that the winning bidder did not know about given incomplete research. There are some bargains and there are some that sell for market or above.
Properties in general do sell for less than their true market value when they are being repossessed by the lender. The lender normally has to offer the property for sale for ten weeks inviting offers. Alot of people buy property this way by keeping their eyes on the property section in local papers. The advert will not mention repossession. They are normally offered by the largest and well known agent in the local area. Buy property abroad instead. I used New Shores International http://www.newshores.co.uk/spanish_prope… when i bought my property in spain and again in Italy. http://www.newshores.co.uk/italy.
Not always, the bank or building society has a duty to the mortgagee to sell the property at the highest marketable price to offset the outstanding money due. Often these houses are trashed by the owner prior to eviction so the price will reflect this. Be aware though it may not only be the mortgage that was owed the owner may have used the property to obtain other loans and the house can have a blacklisting, and there are tales of bailiffs turning up and the new owner having to prove their ID and ownership. These days most banks use a more in depth credit scoring system on the actual applicant rather than the address.
