Whether you a new on the property ladder or an investor looking to snap up a bargain, looking at buying a property at a Mortgagee Sale or Auction could be the way to go. While it seems like it could be a good deal, buyers have to be aware of a few things before they sign the contract.
Is it really a bargain?
A mortgagee sale is an auction and potential buyers can get excited and carried away with their bidding. Always decide on your maximum budget and arrange to get finance before attending the auction. Mortgagee sales are often rushed so the settlement period may be less than a regular sale or auction. It always pays to do your homework before the auction day and get all your LIM and builders reports beforehand. Read the purchase agreement thoroughly because sometimes the agreement that purchasers sign at a mortgagee sale does not include all of the fine print clauses that are there to protect purchasers in standard auction agreements.
Is it in good condition?
While you may go and view the property before the auction, sometime the previous owners may be upset the bank is selling it and trash the place before the settlement date. Always arrange insurance from the day of the auction, just to be on the safe side. Also, it is safe to assume the previous owners fell on hard times financially and haven’t kept up with the maintenance of the property, so any money you save may have to go towards renovations. Be aware that often the chattels are not included in the sale and the previous owners may remove them.
While there are bargains to be found at mortgagee sales, it is definitely buyer beware so always take necessary precautions to protect yourself and your assets.
Have you ever snapped up a bargain at a mortgagee sale?