Mortgagee Sale by auction

Hi everyone.

I have come accross this property, which is being sold by mortgagee and it will be an auction. The auction will be conducted by a REA.

Should I expect this property to be sold at a lower price? What does everyone else think? Has anyone had any experience with auction by mortgagee. Would the reserve price be influenced by the balance on the mortgage?

Your thoughts and experiences would be greatly appreciated.

Thanks

NewAge said:

Hi everyone.

I have come accross this property, which is being sold by mortgagee and it will be an auction. The auction will be conducted by a REA.

Should I expect this property be sold at a lower price? What does everyone else think? Has anyone had experience with auction by mortgagee. Would be reserve price be influenced by the the balance on the mortgage?

Your thoughts and experiences would be greatly appreciated.

Thanks

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Hi NewAge,

My experience with Mortgagee auctions in inner-Melbourne is as follows:

Agents will quote a low price range to build huge interest. Heaps of people will turn out to the auction, thinking they will score a bargain. People then fight it out only to pay too much for the property, usually way more than quoting price. I've found this to be the case with deceased estates as well. In a slow market you might be able to pick up a bargain, but from what I've seen lately its not very likely, especially in inner-Melbourne. Still its worth a try as you never know your luck.

Regards,
Ozi

MIP (mortgagee in possession) auctions can actually serve to generate an even higher price than the sellers anticipate, simply due to the perception that they are a "bargain"

I went to one last year, on which I was prepared to bid, only to see it sell at about $80K more than what I was ready to pay. It was a feeding frenzy and was actually quite amusing, especially considering that directly comparable sales in the same street had sold for $60-100K less than what this property achieved. Guess some people just don't do their homework.....!

Don't rely on the fact that it's a mortgagee sale means you're going to get a bargain. It really depends on the circumstances and timing of the sale as well. Good luck!

i was very lucky in that case

i bought my first IP last year by this method
the only exception was that there was no intrest in the property what so ever and the real estate agent was calling me every 3 days to see if we still wanted it

we were willing to pay about 270 for it and i ended up getting it for 240 and going from recent sales in the area it is roughly worth around the 320 to 340 mark so we have done very well

now we are looking for our next place

like jacque said the main thing is to make sure you do your homework and if you are lucky you might pick up a bargin


cheers

nick

Real life MIP experience this morning ....

Well, I have sauntered (loitered perhaps ) for too long and couldn't help but relay some real life experience on a MIP auction today .....

For the benefit of you all this was an original post war, weatherboard on brick. Completely orginal and in reality needs about a 40-50K spend to bring up to scratch. It sat on a corner block of about 540m2. Having not been able to inspect till this morning we went in for a look before things kicked off ..... full of termites. I know this because I spent a highly informative 3 hours with a fantastic Pest/Building inspection team at another property we "had" a contract on. (but that's another story).

With the damage to fix I reckon it would have been doable at no more than $400k.

On getting back outside it seemed half of Brisbane had turned up to the auction - I counted 140 people roughly. Bidding started slowly at $300,000 and inched up to $400,000 ..... so far so good, I thought it would slow and someone might pick up a nice home at about $410-420k.... but it went past $450,000 shortly after and continued to climb. Several confused glances to other people who had obviously seen this type of thing before and the "lucky" new owner at a princely $501,000.

MIP auctions are certainly entertaining but you should really really really know your prices.

Good for them though..... if they love it, money well spent I suppose.

Cheers
Ryan

I think with mortgagee, deceased estates etc it is good to be there on the day just in case there is very little interest as they do tend to sell on the day for whatever the highest bid is. I woud agree however that no the whole they are an expensive day out.

New Age,
do your homework. I am a buyers advocate operating in Melbourne's suburbs and can tell you from years of experience in the industry that the mortgagee has a positive duty of care to the mortgagor and an obligation to sell the property with regard to their rights. Therefore, there will be a valuation done on the property and they may not sell at a figure less than that on the day. The others in this conversation are also right, the words "mortgagee Auction" can bring out a feeding frenzy in bidders at auction, so set your limit and be prepared to walk away if the bidding goes above it.
Good luck
Kirk

Hey all, maybe i should share my windfall.

I brought 2 townhoues today from the bank. These townhouses were ex housing commision in block of 9 that were delapidated and sold for $930k for 9 townhouses in 2003. they were all rendered, painted, carpeted, landscaped, strated, 3bedrooms new granite kitchens, and 1.5 bathrooms. look like new smick properties. they sold individually for $270-355k, grosely over priced between end 04-early 06, value at that time approx 250k, now value is between 190-225k. i brought 2 in the block today for $140k and 135k. they rent around 210-220pw and represent great value and little out of pocket expense. i saw these go to auction on weekend but did not meet reserve so called up when i saw come on market and offered these figures and they got accepted straight away.

BTW, these are in western sydney aswell.

Well done Nathan...any left?

I recently attended a mortgagee auction; one of three held on the same day from the same unlucky owner. We had done our DD and come up with our price for the property. What I didn't bank on was that others don't necessarily do DD and for many owner occupiers they were still prepared to pay a bit more than an investor to get their foot in the door of their own home. This probably applies to lower priced properties though. We had intended to refix (had been gutted) this house and sell. It probably would have nearly been cash flow neutral but not in a great area.

It sold for 10k more than the reserve that the bank had set. The reserve limit had been my cut-off limit so I walked away. Anyhow it was my first auction and hopefully last. I did however get along really well with the agent who listed the property and as an occasional investor himself knows what we are after and now gives us a call regularly with anything of interest. So not all bad.

Guys, where can i get the list of mortgagee sales properties?

tamugrg said:

Guys, where can i get the list of mortgagee sales properties?

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From here: http://www.nmddata.com.au/

Hi and you find some on this site as well

http://www.pt.nsw.gov.au/

Propertunity said:

From here: http://www.nmddata.com.au/

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Is this a legitimate site?

How do they obtain this kind of information?

Seems a bit too easy...

lostis said:

Is this a legitimate site?

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I think so, although I liked it better when it was a free site. But like a lot of free sites these days - they now want a subscription. Probably worth it if you are sourcing a lot of properties this way I guess.

lostis said:

How do they obtain this kind of information?

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How does anybody get any kind of information. It is just data with a source/sources.

lostis said:

Seems a bit too easy...

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Welcome to the internet my friend (H Simpson).

Propertunity said:

From here: http://www.nmddata.com.au/

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It is a pity you have to pay to see that data now. They have that niche to themselves so can ask for a subscription I guess.

You could try http://ozmortgagee.com/ which has mortgagee and trustee etc listings. Not sure how often updated it is though

On the other side of the coin, does anyone know what happens to the "difference" if the property is sold by the mortgagee for less than the loan was for? Is that what LMI is for? If you are the owner of the property taken back by the bank, and being auctioned off, is that the end of it or do they come after you for the difference?

The bank would defiantly come after YOU for the extra Money!

NewAge said:

Hi everyone.

I have come accross this property, which is being sold by mortgagee and it will be an auction. The auction will be conducted by a REA.

Should I expect this property to be sold at a lower price? What does everyone else think? Has anyone had any experience with auction by mortgagee. Would the reserve price be influenced by the balance on the mortgage?

Your thoughts and experiences would be greatly appreciated.

Thanks

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I'm lead to believe that the selling price is not influenced by the balance owed by the customer of the bank.

It's based on valuations provided by the people on the banks panel of values, the average of 2 is the price set as reserve, the bank has a moral obligation to try achieve the highest price for the mortgagee.

Regs,

RH

What Kirk and Ridin-High said.

Most states have legislation imposing an obligation on mortgagees and receivers (in the case of the Corporations Act) to exercise reasonable care to achieve market value and whether this obligation is satisfied is largely determined by the process and the decisions made by the mortgagee in the course of liquidating the assets. Even failing statutory obligations, in equity (similar to common law) mortgagees have an obligation not to sacrifice the interests of a mortgagor.

Banks are very adverse to being sued for selling under value and I think its a misconception that the bank are prepared to be rid of the property at whatever price.