A family home in a sought-after Hamilton suburb and a block of flats near the CBD are among several mortgagee sales to pop up in the city – but according to property commentators they won’t be the last as financial pressures and falling property prices start to hit home.
Nationally, 100 properties that settled this year have been sold by mortgagee sale and only one of those was in Hamilton. Last year there was also one mortgagee sale in the city, but none in 2020.
There have been 47 in Auckland, 13 in Waikato including the Hamilton sale, eight in Canterbury, seven in Bay of Plenty and six in the Hawkes Bay, according to figures from OneRoof's data provider Valocity.
The listing photos for the executive Flagstaff house and the 10 single bedroom flats in Frankton that are being auctioned next month leave a lot to the imagination particularly what the inside of the properties look like as only the exterior of both properties are on show.
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There are only two photos for 4 Platina Place, in Flagstaff, which appear to have been taken from the other side of the home’s electric gate.
Lodge salesperson Paul Conway, whose is marketing the property with Barfoot & Thompson salesperson Philip Davis, could not comment about the property, but in the listing said:
“The special home has style, size, and a gully outlook”.
Access to the property also seems to have been limited or non-existent as the agency has had to rely on property records for both the size of the four-bedroom home and 298sqm section.
While it seems there have been similar challenges with the Seddon Road block of flats which, according to the listing, are “believed to contain 10 single bedroom flats with carparks”.
Harcourts salesperson David Forster is marketing the 1011sqm site as being either a ready-made investment or a potential land bank or development opportunity. It is being sold on behalf of one of the main banks.
Harcourts Hamilton director Campbell Scott said the Frankton block of flats and a family home on Aquilla Cres in Rototuna that sold at auction in August are the first mortgagee sales his agency has handled since 2018.
Another mortgagee sale in Hamilton, a block of 10 single bedroom units at 43 Seddon Road, in Frankton. Photo / Supplied
This home on Aquila Crescent, in Rototuna North, Hamilton, sold for $1.09 million in August. Photo / Supplied
Access to properties sold as mortgagee sales could be varied, he said, and often depended on whether the vendor was prepared to work with the bank to get the best price or if the owners were distressed about the process and went out of their way to make it difficult to sell.
Scott said it is not unusual for these properties to only have external photos, but often if the access to the property is limited or non-existent then it can affect the price as buyers had factor in the unknown such as the condition of the property and chattels into purchase price.
Scott said this often happened when vendors were initially resistance, but as the campaign went such as had on warmed up and allowed access.
Viewing to the Seddon Road flats had been "ok" and the vendor is now working with the agency to allow access to the property.
The vendors of Aquilla Crescent had also helped get a fair price for their property in August which saw 17 people register for the auction. Although bidding on the four-bedroom, two-bathroom brick and tile home started low, it eventually sold for $1.090m, which was just south of where the agent had appraised it at.
"So, the ones where we don't have access, they probably go for a little bit less and they probably attract slightly fewer buyers because not all of them are prepared to take the risk. But where we've got a more normal campaign, we've got reasonable access, we've got photos, that sort of thing - you definitely attract people who are hoping that they will get it for less than fair market value of a comparable property, but you often find that the amount of buyers that are participating in the process move the price to something pretty close to fair market value."
Ray White Manukau co-owner Tom Rawson, whose agency recently sold a development section in Seaview Road in Glenfield for $1.41m, said these forced sales did come at a risk to the buyer as often access to the property could be tricky and the deal could fall over any time prior to settlement.
This block of land on 24 Seaview Road, in Glenfield, on Auckland's North Shore, sold this month for $1.41 million. Photo / Supplied
Just recently four properties advertised as mortgagee sales in Auckland including in Kawakawa, Glenfield and the high-profile St Mary’s Bay mansion have all been pulled off the market prior to being sold.
Rawson said the most likely reason for these sales not going through is because the owners managed to sort their finances in the nick of time.
“So, if the owner of the property managed to get finance any time before settlement, then they could basically cash-out the deal.”
There are also often no guarantees of the chattels and sometimes they couldn’t guarantee vacant possession, he said.
“They can’t guarantee anything – it's all risk on the buyer and none on the vendor because the vendor in these scenarios is the bank or financier.”
However, some buyers are drawn to mortgagee auctions because they felt they may be able to get a bargain and are dealing with the lender rather than the owner.
“So, the motivation isn’t dictated by the owner of the property, it’s dictated by the people lending them the money. They know it is an unemotional sale – the bank needs to get their money and if they get their money then it’s sold.”
Core Logic chief property economist Kelvin Davidson said the number of mortgagee sales are still “pretty low” with between 10 to 15 properties being sold as mortgagee sales over a three-month period compared to between to about 300 that were sold after the Global Financial Crisis.
However, he expects the number of mortgagee sales will start to rise.
“I guess there is just this is vibe now that there is going to be a bit more distress. People are facing up to higher mortgage rates that have perhaps been insulated for a while by being on a lower fixed rate, but that’s not going to be the case forever.”
While the country’s low unemployment rate was a big insulating factor right now, he said, but if people started to lose their jobs then that’s when people would really come under financial pressure and the banks may be forced to step in.
Valocity head of valuations James Wilson said less than 0.1% of properties are being sold as mortgagee sales and the banks usually try and work with the homeowner or they will encourage the home owners to sell it on their own accord instead of forcing a sale.
While the number of mortgagee sales could increase due to the way the economy is heading, he does not expect it to be at a significant rate at this stage.
