Low reserve sale sign of time

ROBERT CHARLES

GOING ONCE, GOING TWICE: Auctioneer Roland Lina of Harcourts sells a New Plymouth property more than $100,000 bellow its GV last night.

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Three words are dominating Taranaki's real estate pages "sell, sell, sell".

As house prices and interest rates continue to plummet desperate vendors trapped in mortgages they can't afford are looking for creative ways out.

Last night at Harcourts New Plymouth an auction attracting almost 100 people sold an expansive Heta Rd property for almost $120,000 below its government valuation (GV).

Advertised as a pre-mortgagee sale under the title "beat the bank" the six bedroom, 1582sqm, 2 1/2-year-old home had a reserve price of $380,000, was valued at $680,000 and sold for $566,000.

Auctioneer Roland Lina said the days where you could simply "nail a sign to a fence" and a place was sold were over.

"I can assure you if we had advertised it for $600,000 it would still be on the market," he said. Having worked in real estate for 18 years Mr Lina said clever marketing was needed to get the best price and houses off the books.

Several bidders at the auction said they had come in the hope of getting a bargain but expected the "marketing ploy" would push the price way past the low reserve.

Other advertisements on both Trade Me and in real estate publications are littered with phrases such as "lawyer says sell", "priced to sell fast", "bank wants all offers presented NOW" and "Crunch Time!!"

Thought of as existing in a bubble, mortagagee and pre-mortgagee sales are starting to creep on to the region's real estate market.

Industry insiders report a rise in the number of people forced to default on mortgages they got into when interest rates were as high as 9.5 per cent.

Nationally mortgagee sales listed on websites Trade Me and realestate.co.nz have more than doubled in the past year.

Reports say Trade Me's mortgagee sales listing soared from 32 to 106, a 213 per cent rise between January 2008 to January 2009.

TSB Bank manager of retail lending Phil Gerrard said so far that problem was not as serious in Taranaki as other parts of the country but there were "some people having difficultly".

He said the bank tended to contact those who appeared to be in trouble to discuss ways to avoid the stress of a mortgagee sale. These included principal holidays, payment holidays and a restructuring of loans.

"There has been some restructuring going on, more than 12 to 18 months ago," he said.

Mr Gerrard said it was hard to tell how affected some people were as it was a better option to try and sell a home under "normal conditions" and avoid them being tainted by the word mortgagee.

The country's increasing unemployment has been blamed for the mortgagee sales.

- © Fairfax NZ News