But the total remains low
Mortgagee sales grew by 233% in February compared to January, but while the increase seemed large, the number of mortgage sales remained low, according to Trade Me.
Gavin Lloyd, Trade Me property sales director, said that of the 37,000 properties for sale on the site, only 29 were mortgagee sales.
“Given this low base, it’s too early to say whether this is a trend,” Lloyd told Stuff. “There is not much going on there right now, but it's something we can keep an eye on in the future.”
Estimates from credit reporting agency Centrix showed that 18,400 people were behind on payments on their mortgage account, a 22% increase on last year.
Steve Goodey (pictured above), investor and property coach, said mortgagee sales were starting to pop up, but were still rare.
What he and his clients noticed about these mortgagee sales was that they were becoming more likely to complete as a forced sale.
In the past, distressed owners often dealt with increasing prices by refinancing, benefitting from the increased equity in their property, or keeping the property, Goodey said.
He said investors were on the hunt for mortgagee sales.
“The property is going to sell on the day, it’s being forced, so at least you know you’re going to get an outcome, and that’s why they sort of appeal to us,” he said.
Goodey said he avoided mortgagee sales though because they garner a lot of interest from buyers hunting a bargain, citing as an example a recent sale of a fire-damaged property in Auckland which attracted 32 registered bidders.
“They flock to it and it ends up finding its own correct price,” he said. “I don’t want to compete with 30 people.”
Going for a mortgagee sale also comes with some difficulties, such as an owner refusing to vacate, or leaving with the property’s chattels.
“Some people get sh***y and take all the chattels with them, and by that I mean the kitchen, the bath, the plumbing, and I’m just left with the house,” Goodey said.
The number of mortgagee sales remained small, but it will likely be the start of a trend, he said.
“We all know this is a point of the market where mortgagee sales come in because if someone bought a house a year or two years ago at a 3% interest rate fixed and is now going onto 6.5%, that’s an issue,” Goodey said.
“They can’t save that with cash flow – the rental market’s not there to support it. There’s literally just going to be more mortgagee sales, that’s just how it’s going to be.”
To identify mortgagee sales, Trade Me searched for listings containing the word “mortgagee,” then vetted each listing.
Common phrases, such as “buyer must sell,” were unreliable, Lloyd said, as they were commonly used by sellers looking for a quick sale.
The detection method was not perfect.
“Mortgagee sales are understandably a very stressful process for homeowners,” Lloyd told Stuff. “In some cases, vendors might prefer ‘mortgagee sale’ not to be included when advertising their property for a number of reasons. However, including the term ‘mortgagee’ in a listing can be helpful to communicate to potential buyers the urgency of the sale.”
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