What Happens After Repossession

when your house is repossessed - what happens to it?.

The property will be sold to pay off the mortgage. This is achieved by auction or traditional estate agent.

The lender has a legal obligation to achieve the best possible price within reason, but it will likely be less than the market value. Usually the property will go through an estate agent first, if that fails then it will go to auction where the value will probably be massively lower.

The sale price is used to pay off the mortgage, if there is surplus then you should receive that, but if the sale did not raise enough to pay off the mortgage then you are legally bound to pay the difference.

 

If the property is being sold by an estate agent then make sure:

• You find out the exact date it was passed to an agent or agents.
• There is a for sale sign outside the property, if there is no sign then take a date stamped photograph.
• The property is in the estate agents window. If it isn't then go inside and ask for details about properties in that area, if it is mentioned then obtain the full details. If it is not listed then get the name of the sales person.
• Check the sales details and note the value of similar properties in that area
• Make sure the property is described accurately and mentions no upward chain or vacant possession. These are key positive sales factors that may help achieve a quicker sale.

 

Why go to this extent?

• Every day the property is unsold adds interest to the debt
• It prevents you moving on and costs you more.
• Because the property is a repossession the estate agent has instructions to sell it quickly and therefore cheaply which means their commission would be less than for a similar one at market value.
• If there are few buyers around, they will push the one that gives them more income.
• Remember that estate agents usually are paid from sales commission rather than a basic salary.

 

Undervalued repossession properties

If you can prove the property has been undervalued, you can ask the courts for an injunction to prevent a sale. This can be done at any time before the completion date. Lenders (mortgagees in possession) have a legal responsibility to get the best price for the property that can reasonably be obtained. If you think your lender has failed to get a fair price, get advice from a solicitor. You may be entitled to compensation.

 

Stopping a sale due to a change in circumstances

It may be possible to stop the sale if you can raise the money to pay off your debts soon after the eviction. If you want to do this, you need to act quickly; and apply for an injunction to stop the sale of your home while the arrangements are made. If contracts are exchanged with a buyer before you do this, you can't stop the sale from going ahead.