Repossessed Property
Repossessed properties could be an opportunity. Photo – Unsplash
  • Mortgagee possessions or distressed properties are properties that have been repossessed by banks
  • Over the last few months, there has been a rise of valuations for mortgagee possessions
  • For buyers, they could represent an interesting opportunity. For sellers, act early, says Prash Nayar

Mortgagee possessions or distressed properties are properties that have been repossessed by the banks for various reasons primarily the mortgage being left unpaid by the respective owners.

These properties that are taken back by the banks go through the following process:

  1. Re-evaluation
  2. Property Condition Report
  3. Marketing Strategy Proposal
  4. Selling Campaigns

Over the last few months in Western Australia, there has been a rise of valuations requested by the banks on mortgagee possessions which could be attributed to many factors: namely the fallout from the Jobkeeper/Jobseeker ending in March 2021 and the mortgage support wrapping up in the first quarter of this year.

The increase in the number of these distressed properties is a sign of trouble for a minority of the economy, but they shouldn’t be overlooked and in fact, studied for a deeper understanding of why they occur in the first place.

An opportunity?

From the perspective of a real estate purchaser, finding the best deal in a marketplace is vital, especially in a competitive market, as now. There are various places you can find properties like these, including the main real estate portals or through a trusted real estate agent.

Here are some reasons why these represent opportunities:

  1. Distressed properties are generally purchased 25% – 40% below market values;
  2. These properties are sold free of any previous attached unpaid debts/fees;
  3. These properties are generally sold via auction, providing a clear and transparent way of purchasing;
  4. These properties are sold with a building and pest inspection clearly defining any major works that are needed to be done to the home.

Remember, banks hire legal companies to organize the sale and marketing of distressed properties, and real estate agents have a list of previous & forthcoming properties that will be sold via private treaty or auctions.

If you are a seller and find yourself in a financial situation that is progressing southwards, it is important to act early.

Selling the property yourself if the situation allows it is a wise decision rather than allowing the banks to repossess the home and marking this in your credit file. A simple call to the local real estate agent combined with a chat to your financial adviser can put you in a better position sooner rather than later.

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