Mortgagee Sales

[eternit]

Hi Guys,

I just want to confirm few things that I feel about agents and mortgagee sales. I have a feeling that when talking to agents for a mortagee sale they seem to underquote the sale price.

Also the agents say that the banks might accept offers prior to the auction but I feel that they do that to see how much people are expecting to pay and they end up going to auction anyways.

Would like to know if that is true?

Thanks.

 

[sydneyguy]

It's not the Banks interests to get more money out of the propery, unless they think the value dropped so much so they can't get the loan amount back.

As long as it's covered for them, they will just leave it to the market.

So, do not fall for it.

 

[jrc]

The banks will not normally accept offers prior to auction as the courts regard the auction process as most likely to show the value so the bank is protected from a claim by the borrower if the property goes to auction.

 

[beachgurl]

I went to a few mortgagee sales a few weekends ago. The agent told us to turn up and we could get ourselves a great deal. A lot of people registered as bidders and many ended up walking off mid-auction as the prices were way over the figures that were hinted to them.

The biggest thing with mortgagee sales at the moment (particularly in Western Sydney) is that people are defaulting cos they took out 95% loans or higher and the market has plummeted in the meantime so they were unable to sell and clear away the debt when they got into trouble. Means that there are no real bargains to be had as the figure that the bank needs to even be in the ballpark to recoup their monies owed is around the price that would be achieved via a standard sale.

 

[eternit]

I went to a few mortgagee sales a few weekends ago. The agent told us to turn up and we could get ourselves a great deal. A lot of people registered as bidders and many ended up walking off mid-auction as the prices were way over the figures that were hinted to them.

The biggest thing with mortgagee sales at the moment (particularly in Western Sydney) is that people are defaulting cos they took out 95% loans or higher and the market has plummeted in the meantime so they were unable to sell and clear away the debt when they got into trouble. Means that there are no real bargains to be had as the figure that the bank needs to even be in the ballpark to recoup their monies owed is around the price that would be achieved via a standard sale.

Even I am interested in Western Sydney. So its unlikely to get a good deal in a mortgagee sale?

 

[BV]

Even I am interested in Western Sydney. So its unlikely to get a good deal in a mortgagee sale?

Eternit,
Sales records indicate that some people have picked up bargains.
I guess if a property is selling at a very low price the REA's would be offering it first to family or friends.
You just have to keep on looking and hope that there won't be much interest in the property you want.
Cheers

 

[skater]

I went to a few mortgagee sales a few weekends ago. The agent told us to turn up and we could get ourselves a great deal. A lot of people registered as bidders and many ended up walking off mid-auction as the prices were way over the figures that were hinted to them.
This used to happen a lot in Western Sydney late 2002-2003, where an ex-department housing prop in poor condition would sell for much higher than a well looked after one at private treaty. You need to know what is a good buy & what isn't.

The biggest thing with mortgagee sales at the moment (particularly in Western Sydney) is that people are defaulting cos they took out 95% loans or higher and the market has plummeted in the meantime so they were unable to sell and clear away the debt when they got into trouble. Means that there are no real bargains to be had as the figure that the bank needs to even be in the ballpark to recoup their monies owed is around the price that would be achieved via a standard sale.

While this is true in some cases, there are still bargains to be had. Just be in the right place at the right time.

 

[skater]

Even I am interested in Western Sydney. So its unlikely to get a good deal in a mortgagee sale?

You are very wrong. There are some extremely good bargains to be had, but you have to look hard to find them.

 

[eternit]

You are very wrong. There are some extremely good bargains to be had, but you have to look hard to find them.

Do you think its possible to get a 3 bedroom brick house in Seven Hills or Quakers Hills for less than $250K ?

 

[skater]

Do you think its possible to get a 3 bedroom brick house in Seven Hills or Quakers Hills for less than $250K ?

Yes!

 

[WBG Redcliffe]

Hi all

I thought the banks either paid for or asked the client to pay for mortgage insurance if the loan was above 80% of the value of the dwelling. If this is the case when the dwelling goes to auction and the sales price falls below the loan value MI should pay the difference to the bank.

If this is the case, it should not matter to the bank if the dwelling falls below LV.

Correct me if this is wrong.

 

[eternit]

Yes!

Do you have any links?

 

[skater]

Do you have any links?

Looking for the gems will have to be up to you. But I assure they are out there. You don't have to offer list price either. You also don't have to purchase via private treaty.

 

[BV]

Hi all

If this is the case, it should not matter to the bank if the dwelling falls below LV..

Yes in this case it wouldn't matter to them.

However, in cases where someone has borrowed 80% at the peak of the cycle
and in the auction they get less than the loan value, the lender would not want
the sale to proceed and will try to sell it privately for the right price.

I know of a particular property that was vacant for 8 months.
The lender was tossing between fixing it up to bring up it's value
and to rent it out for a while.

In the end they sold it as is.
The holding costs did not seem to be an issue to them.

cheers

 

[eternit]

Looking for the gems will have to be up to you. But I assure they are out there. You don't have to offer list price either. You also don't have to purchase via private treaty.

How do you suggest I can find them ?

I have looked at realestate website and nothing is under 290,000K for 3 bedroom houses in Seven Hills and Quakers Hills.

 

[skater]

You need to be there in person. You can put in low offers. You can attend auctions. You can do a letter box drop. Think outside the box.

 

[eternit]

You need to be there in person. You can put in low offers. You can attend auctions. You can do a letter box drop. Think outside the box.

I could do the first two but letter box drop will be very hard as I am in Canberra

Also I am not sure if this will work but what about putting ad on Sydney Morning Herald for something like looking for a 3 bedroom brick house in seven hills or quaker hills in low $200s for a quick sale?

 

[sailor]

Also I am not sure if this will work but what about putting ad on Sydney Morning Herald for something like looking for a 3 bedroom brick house in seven hills or quaker hills in low $200s for a quick sale?

Nothing ventured....nothing gained. Give it a go and see what happens.

 

[BV]

Also I am not sure if this will work but what about putting ad on Sydney Morning Herald for something like looking for a 3 bedroom brick house in seven hills or quaker hills in low $200s for a quick sale?

Eternit,
low $200's is below land value so I am afraid you won't have much luck in these 2 suburbs.

Also, the thing with bargains is that you have to look for them yourself,
they are not going to come looking for you.

Once you have identified something as being good value
it's not exactly yours yet, you will have to move quickly and
work hard to get the deal through.

Often you will have competition, you should be prepared to move fast to beat the competition,
you can put down a deposit on the spot, you can offer to waive the cooling off period, etc etc.

Don't forget that you are looking for the cheapest property in an area.
Such properties often need a lot of work so you should be prepared to spend some time
and money to bring them back to life.

If you can do that though, not only you will get a higher rent
but you will also have instant equity..

cheers

 

[skater]

BV is correct in that you have to look for them yourself. While not impossible, it does really help to be a local to get the best price possible in an area. Doing an RP Data search of seven hills for properties sold for <$250k in the last 6 mths brings up 35 listings. They are out there, but they aren't going to fall in your lap.

If you can't be in the area all the time, the next best thing could be to purchase an average property for an average price. You won't always be able to buy the cheapest property in an area.