The sheer volume of forced home sales across Sydney has captured everyone’s attention. These forced sales, or foreclosures, come about when a borrower seriously falls behind in their mortgage repayments and is evicted by the bank. A “mortgagee in possession” is then generally enlisted to handle the sale. Right now, latest figures from the NSW Supreme Court show that, in the six months to June 30, 346 writs were issued for repossession, or 13 per week. Compare this half-yearly figure with the 390 repossessions recorded for the whole of last year – and even the 284 logged in 2021 - and it puts stark perspective on the situation.

The current crop of distressed sales – which are also referred to on listings by terms like “mortgagee in possession”, “urgent sale”, “desperate seller” or similar - are largely being triggered by the infamous string of consecutive interest rate rises that started in early 2022.

Combined with this year’s cost-of-living pressures and other financial strains, some mortgage holders are finding repayments too much to bear. Many victims are those who bought during the early days of covid, whether it was their first home or not: in July, research commissioned from CoreLogic by ABC News revealed that the percentage of properties being sold after being owned for fewer than 24 months had hit a nine-year high.

What does it all mean for buyers? The uninitiated would be forgiven for thinking a rise in distressed sales simply means a great time to score a bargain. This is true up to a point, given the fact that a mortgagee is under instruction to sell no matter what. Savings at mortgagee auctions or sale can be in the realm of 10% to 20%

But in fact, the words “distressed sale” or similar should also be read as code for “buyer beware” – and more so than usual says Rose Buyer’s Agents principal Simon Rose.

“There’s a danger for regular home buyers to regard urgent sales like these as a guarantee they’ll be able to pick up the property for a bargain price,” Mr Rose says. “Firstly, it’s not guaranteed and secondly some people are so excited by this blinkered belief that they overlook or even completely forget about all the other fundamentals involved in buying any property – things like location, design, condition of the building, future plans for the area that may affect the property down the track and so on. These are the sorts of things that people can miss, especially when they don’t buy and sell property for a living or haven’t done so enough times to know.”

More hidden traps

There are many other things for buyers to be wary of as well, Mr Rose says. “In some cases an aggrieved former owner who’s miffed at having had their home repossessed may even strip the property of fittings worth money like light fixtures to the hot water system,” Mr Rose points out. Another important factor most regular purchasers overlook is the fact that a mortgagee is bound by the law to perform every function required to achieve the best possible sale price. This includes doing such things as carrying out a formal valuation, executing a proper and adequate marketing campaign and almost always taking the property to auction.
Aside from distressed sales, buyers should also bear in mind that the increased listings that accompany the onset of every spring do not mean it will be easier to find the property they want. And this season there has been quite a jump: according to CoreLogic, the number of auctions scheduled in Sydney for the week ending September 17 is up 30.8% on the same period last year. The week is also expected to be the second busiest auction week of the year-to-date (which was the week ending April 2 with 1017 auctions), with 1010 homes currently scheduled to go under the hammer across the city. This is also up on last week by 12.5% (898 auctions).

“There are many micro markets within Sydney,” Mr Rose explains. “So even though there may be what seems like a sudden flood of properties on the market and therefore a wide range of choice, it varies vastly between suburbs and regions. For instance, that big jump in listings in the area in which you want to buy may actually be in units, or acreages, or villas, when all you want is a family home.”

Rose Buyer’s Agents are experienced buyer’s advocates with the knowledge, networks, and expertise to find their clients the ideal property for the right price. Further information contact us on  1300 244 771