Do bank repossession sales go for less than normal?

There's a property going to auction in my area that has been repossessed by the bank. It's in really bad condition and barely leasable. The EPR is about 20% less than the average market value. The real estate agent says that because it's a bank auction I could get a real bargain however I don't see how that would effect bidders. I'd imagine it would still sell for it's maximum market potential.

Can someone explain why a bank auction has the potential to sell for a lot less than a normal auction?

 

If it is an "off market" transaction or in a dead market then likely you will get a decent discount but if going public in a hot market then expect to pay retail.

 

Potentially - they sell at auction because that is the best indicator of market price (theoretically). So they may take whatever the highest bid at auction is, even if that's ridiculously low.

Edit - I'm not sure if this is still the situation, as there may be more protections for the mortgagor.

 

Not in Melbourne in the current market climate. Maybe when interest rates increase it may happen

 

Because usually they sell the property only subject to some very one sided sale contracts that don't guarantee anything about the property.

 

Many people think they are potentially cheap (watching too much TV) so the demand is higher and they may even sell at a premium.

 

Do bank repossession auctions still have a reserve?

 

Yes they do and its dictated by the bank as they want their money back

A lot of people go for "a bargain" and then it ends up being more than something that's actually liveable.

Go but be prepared to stop bidding when the bargain ends

 

A lot of misinformation on this thread

It comes down supply and demand

If a bank auction comes up in a location with high supply and low demand then you will get a huge discount
If it comes up in a capital city market thats running hot then you get no discount

On the flipside we bought off state trustee in brisbane 4 years ago and i reckon we got a bargain because there was no demand at the time

 

Picked up a mortgagee 2 weeks ago for 30% less than the previous owner paid ($162,000 under the previous PP) 33klm from Brisbane CBD and on just over 1200m2 land, large 4 bed 2.5 bath. Depending on the area some mortgagee properties could be in less than satisfactory condition therefore a 'bargain' is possible

 

Buying from auctions in Queensland is great because the agents up here are generally hopeless at drumming up interest for them, and there isn't a huge buyer pool for auction conditions. I suspect it's different down south because the buyers are conditioned to purchase at auction, and with all the manic growth.

 

I was thinking the same and why don't they publish the reserve?