Landlords.co.nz
Properties going under the hammer at mortgagee sales are selling for about 25% below their market value.
By Susan Edmunds
It comes after reports that the number of mortgagee sales is increasing – there were 524 nationwide in the first quarter of this year, according to Terralink International.
Telfer Young Valuer Andrew Chambers, of Hawkes Bay, said properties at forced sales in his area had sold for everything from 40% below market value to 3.5% below. He said most would go for 20% to 25% off the price that would normally be expected.
The sale price depended to some extent on the property's location, he said. “Less desirable localities are probably 30 per cent below.”
He said homes that were going to mortgagee sale were often poorly maintained, which reduced their sale price.
Chambers said his firm had been involved with seven mortgagee sales so far this year – and 84 since 2008.
He doubted banks had been waiting for the market to pick up to force sales, as some had suggested. “They try every other avenue and then they push [the sale].”
Almost all the properties Chambers had been involved with were private homes – not property investments – and he said nine times out of 10, the owners were left with nothing.
“Quite often there’s a finance company behind the scenes with a caveat on the property.”
Chambers said it was his impression that banks lending new mortgages were more interested in job security than the loan-to-value ratios they would have been concerned with previously.
Source: Landlords.co.nz
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