All Topics / The Treasure Chest / Finding Mortgagee (Foreclosed) Properties

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  • Profile photo of stuartMcGinniskinstuartMcGinniskin
    Join Date: 2002
    Post Count: 0

    I am not yet an active investor but I am doing some research and would like to know if anyone can tell me how to acquire Mortgagee (Foreclosed) properties. I do know that banks pass them onto real estate agents but which ones? I live on the Gold Coast so I am not interested in $500k to $1m mark. Just the cheaper end of the scale. Also I’ve read John Burley’s book and lisened to his tapes and he buys Foreclosed properties off the Gov. So does anyone know how I would find out off them also.
    Thanks Stuart

    Profile photo of Steve McKnightSteve McKnight
    Join Date: 2001
    Post Count: 1,763

    Hi Stuart,

    Some time ago I researched the foreclosure market here in Australia to see if I could apply the information contained in some of John Burley’s product, such as his ‘Fortunes In Foreclosures’ and also his book.

    What I found is that privacy laws here in Oz are a lot more strict than in the US, which makes some of the ideas somewhat unworkable.

    However the general thrust of buying cheap properties due to default is not an uncommon situation here too. Such sales are generally know as ‘distressed sales’ (use this term when dealing with valuers).

    Mortgage laws and fiduciary duties generally restrict a bank or financier from selling out under clients and in all cases I have come across the financier will go to auction (to go to the general market) rather than sell privately (and risk perceived conflicts of interest and alternative agendas – at least in the first instance).

    Australia does not have tax liens as such.

    The closest that I have come across is ‘sheriff sales’, where people who owe money and have court rulings against them have property seized and sold by the Sheriff to clear the debt.

    My research revealed that Sheriff sales are usually advertised in the general notices section of the paper and you can sometimes pick up a bargain (buyer beware though!).

    However, any real estate seemed to be sold with mortgages attached and the first thing that needed to be cleared was the existing mortgage.

    Bottom line… ‘Foreclosures’ do happen in Oz but lenders, while trying to cover their backsides, seem to go to auction rather than offer a private sale. The closest I came to picking up a cheap foreclosure was to buy it privately below reserve after no one showed up at the auction (this was sheer luck!).

    Outside a mortgagee-mortgagor relationship, there are Sheriff sales / auctions, where property seized under court orders is sold – sometimes at a big discount.

    But be wary of what debt is attached to the property and understand that it will need to be cleared before you gain clear title. This might mean you have to ‘cash out’ and at least refinance the property – I can’t see how you could assume the debt easily given credit laws in Australia.


    Steve McKnight

    Steve McKnight | Pty Ltd | CEO

    Success comes from doing things differently

    Profile photo of PuckPuck
    Join Date: 2001
    Post Count: 6

    Hi All

    I’ve been watching the sheriff’s office auctions a fair amount. It looks like it requires a little luck to get something without strings attached.

    If anyone has experience with buying through the sheriff, could you please share :)


    Profile photo of doisa42doisa42
    Join Date: 2001
    Post Count: 4

    Steve, glad to hear your trip went well.

    What are your ideas on picking up real estate when the interest rates rise and people have overextended themselves? Do people usually sell before they get to the “repossession” stage?



    Profile photo of MichaelKeleherMichaelKeleher
    Join Date: 2002
    Post Count: 1

    Steve, you are spot on with the info on distressed sales.
    At a sheriffs auction here in Vic. a few months ago I bid on a two bed flat situated in my area that eventually sold for $82k which was worth $120k.
    I had done a lot of research and the whole matter revolved around unpaid body corp fees of about $1600…..the title was free and clear.
    Sounded good but the things to consider were…..If you win it you must pay in full on the spot by bank cheque, eftpos, or similar method.
    If you cannot pay the auction starts again, which in this case actually happened.
    Before the start of the auction it was asked where the title was and the answer was “unknown”.
    This property had been auctioned months before but did not reach the reserve so a court order was obtained to sell it without reserve.
    So for me the problem was… much am I prepared to tie up for maybe 12 months while I get a court order to get the title issued in my name…….I punted $75k and another guy won at $82k.
    To be honest I would rather have had the title encumbered with a bank involved.
    So sheriff auctions can be great but be aware you are up against seasoned pros who bid to a limit for good reason.
    Cheers Mike

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