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What is Mortgagee Auction

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  • What is Mortgagee Auction


    I have seen a house for sale and the house is set up for a Mortgagee Auction. Can anybody tell me what this means and is this a wise purchase
    for an IP investment. Can a good purchase be made from this type of
    auction or is it better to know the selling range?

    I am really kean on this house but am unsure where to start as far
    as price range goes. I will look at price ranges for other houses in the area but would be grateful for any advice from someone who knows this
    type of auction.


    Home Buyz
    [email protected]

  • #2
    A mortgagee auction is an auction where the bank instead of the property owner is selling the property to recoup money lent. To get a good deal, you must know the prices of similar properties in the area, loss of rent if you need to evict residents of the property, and repairs if the property is trashed.


    • #3
      Thanks Fudosan

      I thought it may have something to do with the banks selling the
      property. The house is in a fair condition so I may not need to do
      much work there intially.

      Will do homework on house prices in the area.

      Is it worth me asking the Agent what the selling range is?

      Will they have a price in mind already?

      I would like to make an offer before this goes to auction.

      Home Buyz
      [email protected]


      • #4
        It is usally very difficult to make an offer prior to auction
        The bank will not divulge how much is owing on the morgage
        You need to get hold of current QV valuation as the price is
        likely to be in that range.
        In a majority of the cases the house is withdrawn prior to auction.
        I think morgagee auction is the 'last resort' and most times
        the owner/bank can work something out at the last minute.

        You need to find out if it is sold with vacant possesion
        as the existing owners/tennats might not move out on
        settlement day.
        Usally settlement day is ! month from the auction and a
        disgruntled tennant / ex owner can do a lot of damage
        in that time.
        It could take some time to arrange eviction of a
        sitting tenant / owner also.

        It is also very difficult to do inspections of the property
        if the tenant is not willing and even the auction is usally
        held at auction rooms.



        • #5
          Thanks for the lengthy reply.

          All this seems more trouble than it is worth.

          I have just called agent and she tells me that the Auction has been put
          on hold, so this would explain exactly what you have just written.

          Would love to purchase this property as I see great potential in it, but
          will let this go if the path to purchase has too many obsticles and pitfalls.

          Other real estates agents have recently told me that the 8-9% yields are
          just not out there.

          Oh well, will just have to keep looking.


          Home Buyz
          [email protected]


          • #6
            Hi Freezing Hot

            Our first investment purchase was a mortgagee sale, and I would do it again if I found a similar property, it was end of 2003 4 bedroom brick house in "bad" area of Rotorua in need of substantial repair and updating GV 63000 we managed to get it for $40000, spent $10000 doing it up and now rent it for $170 per week. A very nice yeild, and a low maintance property since we have already done it up...
            Probably our best performing property
            New to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki


            • #7
              Hi Guys

              Well done Monid.

              Mortgee auction in Tokoroa tomorrow. Two houses, but one has been trashed inside. Would be lucky to go for $7000 because tens of thousands will be needed to fix the inside.

              Anyway should be interesting to watch those who come to have a look and take part.

              "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx


              • #8
                Hi All

                Interesting points. I will have to wait and see if the deal goes thru or not.

                Then take another look at it.

                Home Buyz
                [email protected]


                • #9
                  Hi FreezingHot

                  Originally posted by casacamo
                  I think mortgagee auction is the 'last resort' and most times the owner/bank can work something out at the last minute.
                  Originally posted by FreezingHot
                  I have just called agent and she tells me that the Auction has been put on hold, so this would explain exactly what you have just written.
                  I have encountered a mortgagee auction where the property was placed on hold as there was a caveat registered against the title that had not been rectified prior to auction day. Quite frustrating.

                  All this seems more trouble than it is worth.
                  Chances are most others will be thinking the same thing. This is good
                  Other peoples problems can prove to be great opportunities for those prepared to persevere and find solutions.

                  My first rental was an absolute dog box back when the market was very much in the doom and gloom phase ("Slump") of the cycle. Not many people were into buying rentals let alone taking the time and effort to renno before renting out. The place stank, had holes in 10 doors & some walls, stuffed carpets & vinyls, smashed toilet, the list went on and on but I'm sure you get the picture. When I had finished the renno, the place looked and smelled like new. It turned out an exceptional buy in that market and you can only imagine how it stacks up now
                  The bottom line is that everyone else that saw that house said "YUCK! No thanks" and ran off with their tails between their legs.

                  I'm sure that there are many other forumites out there that have examples of similar things happening, be it difficult tenants, neighbours from hell etc that they managed to overcome some how resulting in great bennefits.

                  Happy hunting


                  • #10
                    Hi Marcus

                    I tend to get put off some times when the going gets tuff instead
                    of getting the tuff going.

                    I have been looking for my 1st IP for the last 4 months and I think that
                    I am starting to get frustrated with it all, but am still confident that
                    I can secure one by the end of this year.

                    Dog box or no dog box, they are all worth trying to make profits
                    from, as you say opportunaties can come from the worst possible

                    I just need to recognise them and make the best out of a bad situation.

                    Thanks for all the great advice. This site is great to learn from and grow.

                    Home Buyz
                    [email protected]