Today I read a very interesting article on stuff.co.nz about an Auction that a good friend of mine Roland Lina conducted last night in New Plymouth. It highlights a good point about what is happening in the market. The article reads as follows.
Three words are dominating Taranaki’s real estate pages “sell, sell, sell”.
As house prices and interest rates continue to plummet desperate vendors trapped in mortgages they can’t afford are looking for creative ways out.
Last night at Harcourts New Plymouth an auction attracting almost 100 people sold an expansive Heta Rd property for almost $120,000 below its government valuation (GV).
Advertised as a pre-mortgagee sale under the title “beat the bank” the six bedroom, 1582sqm, 2 1/2-year-old home had a reserve price of $380,000, was valued at $680,000 and sold for $566,000.
Auctioneer Roland Lina said the days where you could simply “nail a sign to a fence” and a place was sold were over.
“I can assure you if we had advertised it for $600,000 it would still be on the market,” he said. Having worked in real estate for 18 years Mr Lina said clever marketing was needed to get the best price and houses off the books.
Several bidders at the auction said they had come in the hope of getting a bargain but expected the “marketing ploy” would push the price way past the low reserve.
Other advertisements on both Trade Me and in real estate publications are littered with phrases such as “lawyer says sell”, “priced to sell fast”, “bank wants all offers presented NOW” and “Crunch Time!!”
Thought of as existing in a bubble, mortagagee and pre-mortgagee sales are starting to creep on to the region’s real estate market.
Industry insiders report a rise in the number of people forced to default on mortgages they got into when interest rates were as high as 9.5 per cent.
Nationally mortgagee sales listed on websites Trade Me and realestate.co.nz have more than doubled in the past year.
The country’s increasing unemployment has been blamed for the mortgagee sales.
The last comment here is one that doesn’t go down too well with me. Sure enough unemployment is one of the reasons there may be some mortgagee sales but if you get into the nitty gritty of it most of the people that have mortgagee sales at the moment are still on high interest rates. And after talking to a few people in that situation they simply say they canot afford with the incomes they are gettin to pay the mortgage.
Sometimes this figure is up to 80% of the total income goes on the mortgage. And I am sure that there are some people with more. Now think about it, on top of that yo have to eat, pay the rates, the power, the phone, the car bills, insurances and any other costs that you can think of.
What I have found is that some people I have spoken to have been surviving like this purely because of credit facilities that they have been using. For example the weekly wages goes toward the mortgage and then the rest goes on the other bills, but the shortfall is made up of credit – eigther a credit card or a personal loan. Some people have even got to the state of getting personal loans just to pay the credit card off.
Now the simple fact is that you can probably live like this for a very short time until things ironed themselves out a little, but we are in a ressession, if you cant see that or think it wont last i believe you need to have a good look around you. Mortgagee sales will rise because of this fact. As people run out of credit they need to sell or should sell. MOst people will try and hold on to what they have but in a lot of cases the bank steps in and takes over which is what you then call a mortgagee sale.
But as Roland said in the article above there needs to be some smart thinking going on and try and people need to sell before the bank steps in. In that case you as the home owner will have a little more control over what is going to happen to what probably could be your biggest asset. If you are a home owner please do take a close look at your speding and where your money is going. It is much better to try and sell before there is a problem. Becoming a mortgagee is not a nice place to be for anyone.
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