New Home Buyers Hot Tips Part 9: Private Sales & Mortgagee Auctions

New Home Buyers Hot Tips:

Part Nine: Private Sales and Mortgagee Auctions:

A private sale is where the owner of the home decides to sell their home themselves. This is where they will not use an agent to find the buyers. By not using a real estate agent to sell their property the ramifications to a new home buyer are the following. Some banks look at private sales as not reaching the market price for the property. The lenders may have problems at the price you as the buyer may have signed for on the sale and purchase agreement. If you are looking to buy by private sale allow enough time to get the bank to approve the price you have paid. You may have to get a registered valuation completed to back up the price. The vendor may have a registered valuation already completed to back up their asking price. You might like to ask them to see if you can use it. 

Mortgagee Auctions:

A mortgagee sale would occur when a property owner defaults on payments of a mortgage loan secured against their property. The mortgagee which is usually the property owner’s bank is able to sell the property in order to recover the outstanding debt.

A standard sale and purchase comes with certain protections for the buyer. But with a mortgagee sale the agreement may exclude a number of risks assumed to be undertaken by the vendor and the buyers protected rights will be deleted.

Here are some of the risks for a purchaser who buys at a mortgagee auction

 A)   Binding as soon as the hammer has dropped at the auction.

B)   All vendor warranties are deleted

C)   The mortgagee auction will not include chattels in the property.

D)   State of the title of ownership

E)    Mortgagee conditions of sale document not standard.

F)    A bank acting as the mortgagee does not warrant that the property will be livable or in a good state of repair.

G)   Not guaranteed vacant possession.