Tag Archives: Mortgagee Sale

Buying an investment property at a mortgagee sale

True Property -buying an investment at a mortgagee sale

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.

Unhappy occupiers

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?

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Should I consider buying at a Mortgagee Sale?

 

Should I consider buying at a Mortgagee Sale? 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?