When it comes to buying a home, cheap isn't always cheerful

Repossessions hold out the promise of finding a bargain, and many services offer to help you find them. But, as Paul Slade discovers, it may prove a false saving

Anyone who has been house-hunting in the past year or so will be familiar with the heartache of finding a lovely property, only for its price to be way above what is is remotely affordable. At a time when prices are still rising fast, particularly in London and the South-east, getting on the inside track can seem crucial.

One way of cracking the problem of how to find a cheap home is to look out for repossessed properties, where lenders are trying in theory to dispose of them quickly and may accept a low offer. Supposedly catering to this need are many services claiming to give homebuyers details of repossessed properties in their own area.

The Building Societies Repossession List (BSRL) is one of them, the clear suggestion being that this will help you find a bargain. BSRL's own promotional fax describes the information it offers as "a list of the best buys in your area". Subscribers to the BSRL list must pay up to pounds 95 to get three- monthly lists through the post, or up to pounds 225 for an annual subscription.

But housing market experts warn that the savings on repossessed properties are much smaller than you might imagine, and that even these savings are often outweighed by the amount of work needed on the house you buy.

Ray Boulger, a manager at independent mortgage advisers John Charcol says: "A lot of people think the savings are greater than they are. They don't appreciate that, if the property is particularly cheap, it's probably because it needs a lot spent on it. The people who owned the house before may have gutted it, for example."

Hugh Dunsmore-Hardy, chief executive of the National Association of Estate Agents, says: "There have, no doubt, been one or two bargains to pick up in the repossessed market, but I think less of that is now going on. Generally speaking, the values of repossessed properties reflect their condition."

Many lenders putting repossessed properties on the market will insist that the property be advertised in the press for a further seven days after an offer has come in. This is another factor that tends to drive prices back towards their true market value. These ads are also one source of the information contained on repossession lists (see box).

In the best possible cases, Mr Boulger says, it may be possible to save up to 15 per cent on the property's market price. "But you have to be careful not to let people think they can get every repossessed property on that basis," he warns.

The lists generally give brief details of each property, together with details of the relevant estate agent. But, of course, this information is no good at all unless it is up to date.

Mr Dunsmore-Hardy says: "My only concern with these lists is how up-to- date and accurate they are, when the information may be provided through third parties. I would exercise caution."

Telecom Express, another list provider, was fined pounds 2,500 last year for misleading and overcharging its customers. Regulators found that information people received was not updated regularly enough. Information on the Telecom Express service was provided by the Uxbridge-based SNC Telecommunications.

Telecom Express offered its Repossessed Property Index via a "faxback" service, which is paid for by the recipient. This charged customers pounds l.50 a minute for lists that regularly took more than 15 minutes to come over the machine, implying a charge of pounds 22.50 or more.

Another faxback provider - Megafone Ltd of Morecambe - was fined pounds 300 when regulators found that its own list contained details of properties which had already been sold for as long as two months.

Repossessed properties are also sold through auctions advertised in the local press, or promoted through lists of their own. But Mr Boulger says: "The clients who have spoken to me have said that when they go to an auction the prices have ended up being quite a bit higher than the guide price, and they're not particularly good value."

Often the properties sold at auction are what Mr Dunsmore-Hardy calls "the real wrecks" - houses in such poor repair that getting a mortgage on them is all but impossible. These tend to be bought by developers, who then do the necessary work before selling them on at a profit, but are little or no use to private buyers.

WHERE DOES THIS

INFORMATION COME FROM?

Estate agents will seldom publicise the fact that a house on their books is a repossession, for fear of cutting the price it will fetch.

Lenders are equally cagey. They keep a central list of repossessions, but guard its contents closely. So, where does the information on questionable repossession lists come from?

The answer may lie in section 21 of the Estate Agency Act (1979). This section demands that estate agents selling a repossessed property for a lender in the same group declare their interest in the sale to potential buyers. For people who know what to look for, this is enough to tip them off that a particular property has been repossessed.

The declaration can be made either verbally or in writing as part of the property's particulars. There is no single form of words used for this declaration. When Halifax property services is selling houses for its parent bank, however, documents note, "This property is being sold on behalf of Halifax plc".

Council of Mortgage Lenders figures show that the number of repossessions in the UK has fallen sharply since its peak of 75,540 in 1991. Last year, the figure stood at 32,770.