mortgagee auction...no bids..how low should i offer now??

N

natedog

Hi Guys,

Scenario...went to an auction recently...house is in banks possession...3 people there, no bids, nothing.

its still sitting there as a private sale now.

i approached the agent for a copy of the sec 32 and it lists in there the motgage ammount against the property originally.

Is it ridiculous to offer whats listed as the mortgage ammount...considering its about 30% under the price they have now put it on the market for??

as its not an emotional vendeor, just a bank, has anyone done something similar to this before??

i dont know why i am hesitating really...i wasnt looking to purchase, and dont really care if its not accepted...but if i can get it for this price its just too good a value to not try and get it to work!!

any tips (or encouragement to get the balls to do it :))would be appreciated,

Cheers,
Nathan
 
If you really dont want to miss the opportunity what have you got to lose. I would think offering the mortgage amount plus say a 5% - 10% buffer for lenders legals etc would be a good starting point? I think the mortgagee has an obligation not to fire sale it but if its been to public auction and marketed for a while??
 
Marty McDonald said:
If you really dont want to miss the opportunity what have you got to lose. I would think offering the mortgage amount plus say a 5% - 10% buffer for lenders legals etc would be a good starting point? I think the mortgagee has an obligation not to fire sale it but if its been to public auction and marketed for a while??
Click to expand...

Correct, the mortgagee has an obligation to sell the property at "fair market value". However, that is their obligation and there is nothing stopping you from making an offer which you consider appropriate and, if accepted, there should be no adverse consequences against the purchaser in relation to the sale price - assuming all is above board.
 
if a house is valued at say $500k the bank is owed say $200k there is no way legally they will sell to you for $250k............its just not going to happen these days.

as someone has said the bank is legally bound in this area and the defaultee can commence litigation against a bank for flogging the home off so cheap...

better deals elsewhere usually these days than so called fire sales by banks....thats the norm usually i find.

far better to look for estate sales where families are killing each other to get a slice of money and will sell low.
 
csc2 said:
if a house is valued at say $500k the bank is owed say $200k there is no way legally they will sell to you for $250k............its just not going to happen these days.

as someone has said the bank is legally bound in this area and the defaultee can commence litigation against a bank for flogging the home off so cheap...
Click to expand...

i think what he is asking is that, would making an offer based on the amount owed a good tactic.

I believe unless the owed amount is $100k of a $600k property then offering double the owed amount probably is wasting their time, but it might be a psychological turning point from the sellers point....

say the property is worth $1m, and the mortgage was $900k, offering $890k means that they would still owe $10k after the sale, so they might groan and think, where are we going to get $10k from!!! or if you offer $900k, it might tip the scales, and they might think, if we sell at this price, we dont have to ever think/stress about the situation again!! EVER!!!

so it might help, but it would entirely depend on the amount and the personal situation of the vendors

thats how i see it
 
thanks for the responses so far!

little more info...before the auction i asked the agent what would realistically buy it...he said somewhere over $260-$300k.....no bids at auction.

its now sitting for private sale....listed at $300k.

mortgage registered is $205k

rates val $265k

purchasing at $214k would be cash flow neautral based on rent achievable.

thinking an offer of $210k?

any more thoughts?

cheers,
Nathan
 
Hi Nathan

I bought the Mission Brown Wonder in 1994 (during The Recession We Had To Have) for $500 more than the balance of the Vendor's mortgage

The property next door had sold for nearly $20,000 more a few months earlier, but no takers for this one.

The Vendor had moved interstate, the property had been on the market for months, the tenants worked night shift which made access difficult, the place needed a few repairs and repainting, the list goes on.

When I made my offer, I didn't know the balance of the mortgage or anything much else, I just offered what I thought it was worth. The Vendor asked for $500 more, I agreed, and the deal was done.

It was a Win-Win for all concerned and it has been a great investment property for me

Go make your offer, the Mortgagee must still sell for a 'fair' price but what that 'fair' price is, you don't know yet

cheers
Kristine
 
let's not pop the champagne corks too loudly guys - remember there are real people on the other side of this deal, not just the moron bank
 
Hi all,

just an update....

The property sat on the market for another week with no interest and no offers....i have now made an offer....way way below the price listed on the internet...approx 25% below.

Am waiting on a reply from the agent/bank.....made the offer at luchtime yesterday, spoke to the agent today, but he has said no word from the bank yet.

I would have thought that they would give an answer quite quickly?

Will update again soon hopefully,

Cheers,
Nathan
 
Hi all,

just an update....

The property sat on the market for another week with no interest and no offers....i have now made an offer....way way below the price listed on the internet...approx 25% below.

Am waiting on a reply from the agent/bank.....made the offer at luchtime yesterday, spoke to the agent today, but he has said no word from the bank yet.

I would have thought that they would give an answer quite quickly?

Will update again soon hopefully,

Cheers,
Nathan
 
very interested to hear what the REA/bank says! I'm in a similar situation myself atm. Just a newbie question, what's WA's equivalent to a Section 32? How would I find out how much the bank forclosed for for a place in Perth?
 
Hi All,

Not all that surprisingly...the offer was knocked back by the bank...agent is saying that they have had a sworn valuation done and that they are basically holding out for around this level, which would approx 5-7% under the price listed for sale.

I would have thought that the bank would be more keen to offload it rather than hold out...to clear the impaired debt??

Do they not have some sort of obligation to the person who defaulted to clear it up quickly....i understand at a fair price and all...but to hold out for a price that seems a bit high, seems unfair to the defaulter??

Anyway, made an offer slightly higher which is still under what i think its really worth...with some justification from recent sales in the area...and have told the agent that if the bank doesnt accept it that i would leave it on the table...and merry christmas :)

see what happens next,

merry christmas all too,

cheers,
Nathan
 
Interesting topic,

I have been snooping around a property and was going to put a bit in was at auction only 2 of us and no bids. Long story short I found out the property was under contract (fell throught) agent contacted me and asked if I would beat the price offered. Offered price $260000 asking price $290000 was $320000.

The offer was knocked back by the owners and the trust that owns it. I may consider offering my price in couple of months and see what happens, if still available.

I think the situation is they OWE $290000 on the place, but to date have racked up $10 of thousand in legal.

Brian
 
Melbournee said:
what happened? did u get the house or what?
Click to expand...

happy new year all,

never heard from the agent again about the property...noticed it online with an an "under offer", so he obviously got a price that was more attractive.

funny how things happen though...while waiting for the agent to get back to me, started looking at vacant land purely out of interest....ended up making an offer on a block that i think is really good value.

it was accepted!

Cheers,
Nathan
 
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