Buyers guide to mortgagee sales
Find out what a mortgagee sale is and how it differs from a normal property sale.
Who or what is a mortgagee?
A mortgagee is a party, normally a bank, institution or finance company, sometimes even an individual, who has lent money to another party (the mortgagor) and has taken security for that loan over a property owned by the mortgagor.
What is a mortgagee sale?
A mortgagee sale happens when the mortgagor fails to meet their obligations under the mortgage terms; usually by not meeting their mortgage repayments.
The mortgagee then exercises its power of sale and after completing a legal process, the property is sold to recover debt.
In most cases, the property is offered for sale by public auction or tender.
How is a mortgagee auction or tender different?
Mortgagee sales are offered under different terms and conditions
As the mortgagee is not the owner of the property, it offers the property for sale under different terms and conditions.
For example, most mortgagee sales are not offered for sale with vacant possession and do not include chattels in the sale. Additionally, the mortgagee generally does not give warranties regarding building permits, codes of compliance or boundaries.
The full sale conditions are contained in the auction particulars and conditions of sale or the tender documents.
Prospective purchasers should obtain a copy of these from the real estate salesperson and familiarise themselves with the conditions of sale before attending the auction or submitting a tender.
If they do not understand any of these conditions or are unsure about any matter, they should consult their solicitor.
It is also the buyer's responsibility to have researched the property fully and satisfied themselves in all respects concerning the property.
Frequently asked questions:
Is there a reserve set at a mortgagee auction?
The mortgagee will set a reserve with the auctioneer prior to the auction.
This reserve is kept confidential between the mortgagee and the auctioneer and is not made public.
Can a mortgagee sale property be withdrawn prior to the auction or closing of tenders?
The mortgagor has the right to redeem or repay their mortgage, on terms satisfactory to the mortgagee, prior to the property being sold.
As such, some properties offered for sale on behalf of a mortgagee are withdrawn from sale.
To find out more about bidding at a mortgagee auction speak to your salesperson.
How do I find out what properties are being offered for mortgagee sale by Barfoot & Thompson?
Search for mortgagee sales on our website.
Alternatively, contact a salesperson or find a branch near you.
Looking for other ways to buy?
Read the buyers' guides' to auctions, tenders and price by negotiation.
