Mason Parker Mortgagee Marketing Specialist

Mark Sainsbury from TVNZ ran a CLOSE UP programme about the risks of buying a mortgagee property. The program tonight suggests some of the risks buyers of mortgagee properties take.

Mason Parker’s advice:

• factor in the risks in your offer (eg if damage occurs or if chattels are not onsite can you cover those costs?)
• suggest changing the locks on acceptance to add further security
• have your solicitor approve any mortgagee purchase deal before confirming (or even before signing)
• do your homework before making any offer LIM’s, PIM’s view code of compliance etc
• it is impossible to take away all risks – make sure you take measured risks where you are aware of the pro’s and the con’s – if you are not comfortable with risks on any property simply don’t buy it!

See the program here http://tvnz.co.nz/close-up/mortgagee-sales-fraught-risk-2788023/video 

Remember:

•  mortgagee sales are generally purchased at lower prices than vendor offered sales and they do have an element of risk – that is why they are generally purchased for lower prices. Make sure you know the risks go into any sale/purchase with your eyes open.
• “mortgagee sales are not giveaway’s” the mortgagee is duty bound to get as fair value as they can for the mortgagor – in fact if the property sells for more than any debt the balance is paid to the mortgagor.

Am I saying don’t buy a mortgagee property? – ABSOLUTELY NOT! There are some great properties that end up at Mortgagee Sales and often bought at more affordable prices but I recommend buyers research before making offers and take reasonable steps to minimise any risks.

The TVNZ website article http://tvnz.co.nz/business-news/mortgagee-sales-record-levels-2536835 - (copied below)

Startling new figures reveal the full extent of New Zealand’s property market slump, with mortgagee sales at a 15 year high.

Property information company Terralink has compiled the first comprehensive study of forced sales.

December saw 191 registered mortgagee sales, the highest number in the 15 years that records have been kept.

That’s a whopping 290% increase from the previous year.

“We were quite surprised by the speed at which it was happening,” says Terralink managing director Mike Donald.

Early indications show even more mortgagee sales in January.

“January is normally a slow month for the country with everything on holiday, so we’re anticipating the February figures will continue to rise,” says Donald.

Terralink says that finance companies are behind many of the sales, suggesing that the credit crunch is hurting them more than trading banks. A second wave of mortgagee sales is also predicted caused by the massive number of redundancies expected to hit the economy.

Market watchers say other countries are even worse-hit.

“The US is recording for the whole of 2008 45% foreclosures, the equivalent of mortgagee sales, so we’re nowhere near the extent of that dramatic scale,” says Alistair Helm of realestate.co.nz

You can also see the TVNZ video http://tvnz.co.nz/business-news/mortgagee-sales-record-levels-2536835/video

While the article and the video are shocking – it seems worth noting that the NZ economy has not had the level of extreme lending (bordering on reckless lending in my humble opinion) that has been occurring in the US – that’s why they have up to 45% of real estate listing recorded as foreclosures. (a figure mentioned in the video and various articles)

New Zealand needs to keep a real eye on how things are reported and qaulify the statements – we are not the US and while we track their trends I believe we will experience less trauma than the US real estate economy…as long as we continue to supply the world with food and primary products.

These views are the humble opinion of Mason Parker Harcourts Levin Sales and Marketing Specialist.