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Why a bank would acquire a property

Discussion in 'General Property Chat' started by Samj, 1st Apr, 2016.

  1. Samj

    Samj Well-Known Member

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    There is a property on the market saying "Bank says sell" and it's to be gone through an auction soon. I was told the bank would acquire the property if it won't sell in the auction. It's unit and I am not sure why such a situation can happen to a property. I would like to give an offer prior the auction and bit uncertain as I am not sure what's going wrong with this property. The agent wouldn't tell anything about the bank story. Do you have any idea what could be the reason?

    Thanks!
    Sam
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Most likely the existing owner didn't make their mortgage repayments. The bank is focing the owner to sell the property to pay off the debt.

    The vendor is going to have a minimum price which they need to sell for, but it would be difficult to determine what that figure is.

    If it doesn't sell at auction, after a bit more of a process the bank will take possession and sell it. At that point the price might be a bit more flexible.

    My experience is these properties often aren't a bargain. It could be because everyone sees the add, thinks it will be a bargain and then a bidding war commences.
     
    Kate Moloney likes this.
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Owners aren't making their repayments

    Cheers

    Jamie
     
  4. Samj

    Samj Well-Known Member

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    Thanks Peter and Jamie.

    I was just wondering if that's because of any hidden issue with the property.
     
  5. Samj

    Samj Well-Known Member

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    Just for curiosity. What would happen after the bank acquire the property? Will the owner get some money back if the bank manage to sell it at a higher price over the mortgage amount?
     
  6. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Banks don't acquire property because of any hidden issues. They acquire property for non-payment of mortgage as Pete & Jamie have said.
     
  7. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Owners will get the difference between the selling price and the mortgage payout figure (inlcuding costs of repossession). If there is a shortfall, the vendors may still owe the bank or the mortgage insurer (who will still chase them for the money).
    The bank must be seen to be getting the best price they can for the property and not just to cover their debt. This is why it generally has to go to auction.
     
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  8. Raydar

    Raydar Well-Known Member

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    No courthouse step auctions here.
     
  9. Big Will

    Big Will Well-Known Member

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    They also use the auction as it is public what the offers are so no one can say oh the REA sold it to their mate as I was going to pay more. Or the vendor saying the bank is just trying to screw them for more money by taking the first offer.

    At the auction it is clear who is bidding (putting an offer) and what their bid is (offer is). If you don't bid then you cannot say you didn't have the chance to purchase the place.
     
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  10. Dazedmw

    Dazedmw Well-Known Member

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    This is true. I have seen situations where properties like these were sold quickly off market for below market value but once they get advertised and go to auction (or the bank takes possession) its pretty much like any other sale.
     
  11. ashish1137

    ashish1137 Well-Known Member

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    Is there a way to know what properties in what area will be sold like that?

    I see there are a couple of websites that list properties saying Mortgagee sale, real bargain, etc. Etc.

    However, most of them seems like hoax or normal properties only and they want to attract more buyers.

    Regards
     
  12. Kate Moloney

    Kate Moloney Well-Known Member

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    Its likely the owner is behind on payments and bank may be on the verge of foreclosing or asking the owner to voluntarily surrender the property if it don't sell, but you never know, it could also be an advertising gimmick too.
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    We have had many a finance deal secured by a ba that's been a little under what a subsequent val was 3 mths down the track.

    Often but not always the props do need some tlc and this can in many cases provide for more benefit when revalueing

    Ta

    Rolf
     
  14. dabbler

    dabbler Well-Known Member

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    Bank has property probably due to non payment for whatever reason.

    They won't be looking at offers most likely, it will go to auction most likely, depends on the situation behind, but they have a duty to get a reasonable price.

    If you really want it and they will look at offers, it would have to be around market value, no fire sale price.
     
  15. willair

    willair Well-Known Member Premium Member

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    A quick search,on a judgment of Meldov Pty Ltd-v-BOQ /2015/NSWSC -378,and if one understands who when and why the all monies clause works may give you a better understanding,that's if the person who signs the contract with any bank reads every page and asks the question,most don't....

    Protecting your security against mistaken payments

    All monies clauses
     
    Last edited: 2nd Apr, 2016