Purchasing property through mortgagee sales can be a great way to invest in the property market, as long as you seek the correct advice and know what to look out for.
Buyer protection cover
Mortgagee sales are a way for banks to recoup their costs and they will be striving to get the best price possible. Therefore, the bank doesn’t want further liability hanging over the sale and this can leave the buyer exposed in ways not present in a normal purchase.
Chattels, Fixtures and Fittings
Does the agreement cover chattels, fixtures and fittings or are they being removed from the property? When you view the property it usually has floor and window coverings, or a dishwasher but it does not necessarily mean that they are part of the purchase.
The current owner may not have agreed to the sale and you must be aware that they could potentially damage the property before you take it over.
Check with your insurance company
Insurance providers are well aware of mortgagee sale risks so you need to know what is not covered. Theft, damage and vandalism are risks that you need to factor into your purchase price.
View the property in person
Don’t rely on internet descriptions and photos. Don’t rely on real estate brochures or phone calls with estate agents. Visit the property yourself and take photos of each room so you know what is there prior to the sale.
If your bank or insurance company aren’t doing their best by you, that doesn’t mean you should miss out on bidding. Contracts with deleted guarantees and limited insurance means that you need to be a proactive purchaser.
Know your budget
Consider the costs of renovation in case of worse case scenarios. Factor in the cost of landscaping or a new garden if required. Don’t purchase the property if you don’t have the financial flexibility to fix up the mortgagee property if necessary. Once you factor in all costs, you will know what your budget is and if it really is a bargain or not.
There are definitely bargains out there, it is simply a case of Buyer Beware. You may even be able to negotiate a deal where the previous owners become your tenants in order to stay in their home.
Have you ever found a bargain at a mortgagee sale?