MORTGAGEE SALES
Opportunity or Hidden Trap?
A mortgagee sale can seem like an unbeatable bargain in New Zealand’s competitive housing market—but it’s not a buying method for the faint-hearted. These sales occur when a property owner defaults on their mortgage, and the lender (usually a bank) takes legal steps to recover the loan by selling the home.
At Harcourts Patras & Co in Greenlane, we help buyers carefully navigate mortgagee sale opportunities—ensuring you know what you're getting into before signing the dotted line. This guide explains the process, benefits, and risks of buying a property through mortgagee sale in 2025.
What is a Mortgagee Sale?
A mortgagee sale is the sale of a property by a mortgage lender (the mortgagee) when the borrower (the mortgagor) has failed to meet their repayment obligations.
Key features:
The bank or lender sells the property, usually through auction.
The owner may or may not still occupy the home.
The property is sold on an “as is, where is” basis—with no warranties and no guarantees.
Why Properties Are Sold as Mortgagee Sales
Homeowners default on mortgage repayments.
The lender takes legal possession and exercises their right to sell the asset.
The goal is to recover the debt as quickly and efficiently as possible.
Benefits of Buying via Mortgagee Sale
Potential Bargain Price
Mortgagee sales often attract buyers seeking a “deal,” especially if the property has been neglected or under-marketed.
Less Emotional Competition
Compared to hot auctions or deadline sales, some mortgagee sales fly under the radar, creating less buyer competition.
Quicker Turnaround
Lenders are usually motivated to sell quickly, especially if the legal process has been drawn out.
Investor Opportunity
Buyers with experience in renovation or redevelopment can capitalise on under-valued property.
The Risks and Caveats
While the price tag might look attractive, mortgagee sales come with considerable risks:
Sold ‘As Is, Where Is’
The bank makes no warranties about the condition of the property, legality of structures, or whether the chattels (e.g., stove, curtains) are included.
Access Limitations
In some cases, the previous owner still occupies the property and won’t allow access for viewings or inspections.
No Vendor Disclosure
The mortgagee is not legally required to provide a LIM report, building report, or property history.
Legal Complications
There may be unresolved issues, such as unconsented works, caveats, or unpaid rates.
Emotional and Ethical Factors
You may be buying someone else’s misfortune, which some buyers find uncomfortable.
How the Mortgagee Sale Process Works
1. Property is Listed for Sale
Most mortgagee properties are sold via auction, but some may go through tender or private treaty.
2. Buyer Due Diligence
You must obtain a copy of the Sale & Purchase Agreement and have it reviewed by a lawyer.
Order your own LIM, title search, and building inspection.
Finance must be ready, as most mortgagee sales are unconditional.
3. Auction or Offer Submission
If at auction, the usual auction rules apply.
If by private treaty or deadline, you submit a written offer.
4. Immediate Commitment
Once accepted, the sale is legally binding.
A 10% deposit is usually required immediately, with a set settlement date.
Who Should Consider Buying via Mortgagee Sale?
Experienced Investors
With legal, financial, and renovation knowledge, they can assess and absorb the risks.Cash Buyers
Mortgagee sales often require unconditional finance and quick settlement.Renovators or Developers
Properties that need significant work may be sold well below market value.Buyers Seeking Undervalued Assets
For those priced out of standard sales, mortgagee sales may offer an entry point—with caution.
Why Harcourts Patras & Co is Your Best Partner
At Harcourts Patras & Co, we’ve supported numerous buyers through complex mortgagee sales. Our team in Greenlane provides:
Clear Legal Guidance
We refer clients to specialist solicitors for reviewing agreements and identifying risks.Full Due Diligence Support
From arranging inspections to understanding title concerns, we ensure no surprises post-sale.Local Property Insight
We can estimate the true value of the property and assess whether the “deal” is genuine.Professional Auction Support
Our auctioneers and agents prepare you with strategy, expectations, and process clarity.
Tips for Navigating a Mortgagee Sale
Always Get Legal Advice
The bank is not your advocate—you need a solicitor to review the terms and point out risks.Do Your Own Property Checks
Order a LIM, building report, and verify the title—even if the property is inaccessible.Clarify What’s Included
Chattels may be missing. Confirm what is or isn't staying.Factor in Repairs or Renovations
Many mortgagee sales involve deferred maintenance or damage.Stick to Your Budget
Don’t be tempted by a "deal" if legal or repair costs could spiral.Prepare for Quick Settlement
Mortgagee sales often require fast, clean transactions.
Common Misconceptions About Mortgagee Sales
“It’s always a bargain”
Not always. Legal and repair costs can outweigh the discount.“The bank guarantees the sale”
No. You buy at your own risk—without any seller guarantees.“You’ll have plenty of access”
Not necessarily. Some buyers never see the inside before purchase.“You can back out if something goes wrong”
Once the contract is unconditional, you’re legally bound—even if major issues are discovered later.
Conclusion: Is a Mortgagee Sale Right for You?
Buying through a mortgagee sale can be rewarding—but it requires preparation, legal support, and a clear understanding of the risks involved. For experienced buyers or those working with a trusted team like Harcourts Patras & Co in Greenlane, it can be a rare chance to acquire property at below-market value.
Just remember—what looks like a bargain today could become a burden tomorrow if you’re not fully informed.