So why do banks and estates go to auction?
With a deceased estate it must go through probate, which normally will take two to five weeks, however cannot be granted earlier than twenty-eight days.
Often there may be multiple beneficiaries involved in the sale of the estate.
A sale by auction is the fairest and most transparent way to sell the property or properties.
All parties involved in the decision making see that the highest price was obtained from the market.
The sale is conducted as with all auctions in a relatively short time frame of three to four weeks on the market.
The sale on auction day is unconditionally exchanged and usually a short settlement of thirty days is made so all parties can move on.
When a mortgagee steps in typically for a bank the process for recovering a defaulting borrowers property will take six months and in many cases longer.
So when a bank has to sell a property they have had to take back passion of they are looking for a quick , clean and unconditional sale.
With a property going to public auction it allows the bank to recover monies quickly and get the best possible price from the market in a short time frame.
In saying this occasionally if the buyer competition is not there investors can pick up a good buy at auction.
I have seen and conducted many auctions both mortgagee and deceased estates.
Auctions can go both ways, when the competition is strong they can sell well , other times without competition buyers can pick up a good value purchase.
I once had an auction original hopes of $600,000 based on its valuation had come down and as the property went through two failed auctions with other companies a new valuation of $480,000 after sitting six months on the market was arrived at.
We auctioned the home and the bidding got to $430,000 and the bank took the sale as it was the best offer they had received in nine months of being on the market.
I have sold deceased estates with very reasonable reserves in prime suburbs.
We had one last year that the buyers picked up for around $1.6m that would be worth $2m now with around $200,000 renovation, a gain of around $200,000 in less than twelve months.
We had an original double brick unit that sold around $675,000 last year which would now be mid 7’s and with a renovation pushing up around $900,000.
There is often good buys on mortgagee and deceased estate auctions, particularly when they are in the inner suburbs and have been held for a long time.
The stigma of a deceased estate auction can put many live in buyers off.
It always pays to research development opportunities if the property is on a large block.
In closing I would recommend property buyers inspect as many deceased estate and mortgagee auctions as possible that could be of interest to you because you may just pick up a very good buy at the right price.