Christchurch Real Estate

Mortgagee Sales… Money Is Still Tight

Mortgagee Sales now account for 4% of all house sales. This is a disturbing statistics. It is horrifying to think that 1 in 25 houses selling on the market today are mortgagee sales. For statistics

Regional towns across New Zealand are feeling the squeeze as mortgagee sales hit another historic high in September, according to the latest figures from Terralink International.

The data released today showed 343 registered mortgagee sales – up on the previous record number of 321 in July this year.

September 2009’s figures are up 130 per cent from the 149 mortgagee sales recorded in September 2008.

In September 2007, prior to the recession, there were 16 mortgagee sales.

Terralink Managing Director Mike Donald said the new record figures followed an uncharacteristic dip in mortgagee sales the month before.

“The continuing increase in mortgagee sales came as no surprise because all indicators showed the worst was not over for property owners. I don’t think we’ll see a true decline until sometime next year,” he said.

Regional towns and cities showed the greatest increases in mortgagee sales, Mr Donald added.

The number of mortgagee sales in Manawatu has doubled in a month from 11 to 22, Hawke’s Bay has gone from 15 to 24 and there were 32 mortgagee sales in the Waikato region in September, up from 18 the month before.

Northland, Otago and the Bay of Plenty also saw significant increases.

“The recession isn’t just hurting people in the big cities, small town New Zealand is clearly hurting too,” Mr Donald said.

Christchurch was the hardest hit main city, up from 19 mortgagee sales in August, to 29 in September.

figure source: NZ Herald

As I see it now there is no logical reason as to why house prices in New Zealand haven’t yet crashed in a dramatic way like the rest of the world. Not only is farming bad but tourism is terrible. Mortgagee sales and mortgagee auctions have risen 100% in Northland from May 2008 to May 2009, In Auckland during the same period, they rose 211% and in Wellington 1000%

This begs me to ask why are people getting themselves into the hassle of mortgagee sales but unfortunately its just about people not taking the right measures to avoid it. But I still receive emails from people asking why do people get themselves into this situation and others asking what actually happens in a mortgagee sale. So here is a quick excert from a New Zealand Website that details what a mortgagee sale is…

So what happens at a mortgagee sale?

A mortgagee sale is the final stage of the mortgagee process, at which the property which is the subject of the mortgagee action is sold at public auction to the highest bidder. The sale is conducted by a court-appointed referee. The referee commences the sale by reading aloud the Terms of Sale; the Terms of Sale is the document that acts as the contract of sale between the referee and the high bidder, and sets forth the rights, responsibilities and obligations of both the referee and the high bidder. Once the referee has read the Terms of Sale, the referee begins to accept bids for the property. The foreclosing mortgage holder (the “Mortgagee”) usually has an “upset price” which is the minimum amount it will accept in satisfaction of the mortgage debt. If the highest amount bid is less than the upset price, the Mortgagee will usually be the high bidder and take title to the property. If, however, the highest amount bid exceeds the upset price, the property will generally be sold to the highest bidder.

How does this happen?

If you fail to make the payments due under a mortgage on your home, the lender (the “mortgagee”) has the right to recoup the loan amount through exercising the powers contained in the mortgage contract. Usually this is done through the power to sell the property.

The mortgagee must, however, fulfil certain strict legal requirements, including serving you (the “mortgagor”) with the proper notice. If these requirements aren’t met then you may be able to apply to the court for a remedy.

Mortgagee must serve you with notice before taking action

Before taking action the mortgagee must serve you with a notice under section 92 of the PROPERTY LAW ACT 1952. This notice must adequately inform you of:

• the nature and extent of the default complained of (that is, the amount by which you are in default)
• the date by which you must remedy the default
• the rights that the mortgagee is entitled to exercise if you don’t remedy the default by the specified date

The date specified must be at least four weeks from the date on which the notice is given. But if the mortgage contract specifies a period for this that is longer than four weeks, the date specified in the notice cannot be earlier than the end of that longer period.

If you receive a notice from your mortgagee that does not comply with the legal requirements, you may be able to apply to the court for an injunction to prevent the sale going ahead. Further, if the mortgagee exercises the power of sale before the date specified in the notice, you may also be able to apply to the court for a remedy.

The mortgagee’s duty to obtain the best price

The mortgagee has a statutory duty to take reasonable care to obtain the best price reasonably obtainable as at the time of sale. If the mortgagee breaches this duty, you can apply to the court for a remedy.

To satisfy the duty the mortgagee must adequately market the property, which may involve advertising outside the local area, giving notice of the property’s advantages (including the potential for any development), and setting a realistic reserve price based on the property’s valuation.

Three ways of exercising the power of sale

The mortgagee can exercise the power of sale in one of three ways:

• sale through the High Court Registrar
• sale through public auction
• a private sale

Sale through the Registrar

If the mortgagee chooses to exercise its power of sale through the High Court Registrar, it must apply to the Registrar and notify the Registrar of the name and address of the mortgagor and of any other mortgagee. The Registrar must be satisfied that the mortgagee is entitled to exercise its power of sale.

A mortgagee is entitled to buy the mortgaged property only if the sale is conducted through the Registrar.

Your right to redeem the property

There is a small degree of protection afforded to you, the mortgagor, through the “redemption price” – this is the price at which you may redeem the land to be sold. At any time before the Registrar’s sale you may pay the redemption price or the amount due and owing under the mortgage; the mortgagee must then release the mortgage.

The redemption price is set by the mortgagee, and must be specified in the mortgagee’s application to the Registrar to conduct the sale. Any advertisement for the mortgagee sale must state that the redemption price is available at the Registrar’s office and can be obtained before the auction.

The best thing to do is talk to your lender and your solicitor early to avoid heartache.

The reality is that real people are having mortgagee sales. Its as easy as a person losing their job. For example a friend of mine lost his job, have a mortgage holiday but his new job did not give him enough money to pay the mortgage. He then was notified that his home was going to be sold and there was not much he could do. This is very real and looking at the economic situation out there there will not be a sudden drop off from these types of sales.

November 22 2009 | Sellers and The Market | 4 Comments »

I Need To Sell My House

Selling your house in a market where there is a very stiff competition with other properties is incredibly a tough thing to do. You need to ask yourself the question. Why am I selling? If you want to sell then prepare for it and if you need to sell then prepare for that as well. The worst case is it can take you years before you can finally sell it. The best thing you can do is to make your property stand out from other houses for sale and maintain it so you can survive the competition. Consider some of these effective ways on how to sell your house in an instant.

Everybody knows that price is a major factor since most of aspiring homeowners depend on their resources for every move they make. And one of this is buying a house. Make sure to be lenient when it comes to setting a selling price for your house. Consider other offers by potential home buyers. It will greatly help if you place in one of your advertisements that you are open to offers. This will attract more buyers to inquire about your house.

When you attempt to sell your property and the last time you renovated it was a decade ago, then expect that it may not be as attractive to people. Prior to selling your house, make sure to do some small cosmetic improvements like repainting the walls and ceilings, replace destroyed lock and door knobs, remove broken tiles and other related repairs that will help enhance the quality of your home. Bear in mind that home buyers will see your properties as well as other for sale houses, so you should secure the entire package of your house before you list it in the market.

A potential home buyer imagines their own style on your house. Family portraits displayed all over the living room can have sentimental value but once the buyer has seen them, they might be intimidated or they feel they are breaking your privacy. Your house must allow them to feel that this can be their own place if they decide to buy it. Do not leave anything that will imply to them that the house is still the owner’s property. Get rid of all the personal things and other stuff that will make them feel awkward when they go inside.

You might have a tendency to collect anything and everything then place it in your storage room. Before you sell it, get rid of all those stuff since this will make your place overcrowded. It can also imply that it is too small which can discourage potential home buyers. As much as possible, make it appear to be spacious, even if your place is not that big.

Consider the opinion of other people about your house. While you think that your place is a perfect abode, others might not look it that way. Sometimes they see so many flaws and other can also look at it the way you think about it. It pays to listen to those tips and suggestions so you can improve it more and enhance its quality. Do not find it too bad whenever they criticize your house. Everyone is entitled to their own opinion. Just accept them and make them as your basis for improvement.

Now that you have read the suggestions on how to sell your house, try to implement them and you will notice the development as you go along. However, it will also help if you try to put yourself in the place of the buyer. Try to ask yourself what are the things that you are looking for a dream house? Contemplate on it and you will surely sell your home in an instant.

If you hang in there you will get a sale. One person told me to look at house sales like car sales. When you go out looking at buying a car the first thing you generally find out what kind of car you want and then establish your budget. In regard to a house that is usually by location and price. The next thing we do is look on the internet and or the local papers at the competition that is out there.

Then we look at a few out there and test drive them. For many people in Real Estate terms this can be done in an Open Home.

If you need to sell your home this is when it becomes important. You need to look at your home in a certain light and then figure out what a potential buyer will want from it and then try and establish as many reasons why the buyer will buy. If your house has more features/reasons for the buyer to buy yours and then the price is right your one may be the one they offer on.

November 20 2009 | Uncategorized | 1 Comment »