Buying a repo property

Each lender will have its own favour agent for each town and region.

These lists are not publically advertised as for say somewhere like the US.

Just need to look in your local paper or talk to a couple of agents and see if they act for an particular lender.

Yes they are instructed by them as mortgagee in possession.

Just because it has been repossessed by the banks doesn’t mean it is going for cheap. Banks like to make as much money as possible and they won’t sell cheap just to get their money back…they will try to make a profit.

The way to get them for cheap is like allycat did. Find properties that have been on their books for a long time which won’t sell and make a low ball offer.

Why are you trying this strategy? To make it easier to achieve positive cashflow?

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cash Flow Properties Are Just A Click Away

Mortgagees do have an obligation to sell properties under 'Mortgagees Auction' for the best possible price with any surplus after payout the debts + fees & charges to the mortgagor/owner. They can't just set the reserve for what the property owes them

Banks will often obtain an independant Market Valuation to establish a fair price to cover themselves in case the mortgagor makes a claim for 'underselling' the property.
Buying at a mortgagees auction may mean you get a property at a good price (maybe $10k-$20k ~5% less) rather than an obsolute bargin

Of course in Alleycats case he was lucky that the Bank had a 'undesirable' property and after 8 months the Bank could 'off load' it at a bargain with little risk of any claim from the mortgagor

Banks don’t get to keep the money – only clear their debt and costs – surplus goes to the owner. Most banks actually stop charging interest on bad debts therefore when they are in foreclosure mode the debt is actually interest free.

By making bad debt interest free the banks lose money due to their cost of funds – However cost of funds is absorbed by the banks entire balance sheet.

If the banks capitalized interest on bad debt there is less chance of recovery of the full loan amount and therefore higher provisions for capital losses (banks dont like capital loses) e.g. Better for the bank to lose it via lost interest revenue than capital losses ( even if it costs more).

The banks almost always go to auction to avoid the cusomter claiming the bank sold at a favourable price – by law the bank still has to try to recover the full value – at auction they can always claim it sold at market price on the day.

P.s. Non banks dont have the same issues with losing interest rather than capital – they will charge interest until the end. You are better off being sold up by a bank than non bank lender….

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