Going twice: Desperate borrowers slash sale prices to lure stingy buyers

9 out of 10 mortgagee sales failed in 1H14.

Homeowners who are desperate to sell their property are now scaling back their asking prices to attract penny-pinching buyers, a report by Knight Frank revealed today.

Despite a stunning rise in the number of landed properties put up for auction in 1H14, the success rate of mortgagee sale prices nonetheless fell from 28% to 14%.

According to Knight Frank, “This indicated the increasing willingness of owners to be more realistic in their asking prices in order to meet the expectations of potential buyers. In view of the prevailing buyers’ market situation, sellers genuinely keen to dispose their properties should adopt a more realistic pricing strategy as potential buyers await on the sidelines in anticipation of price moderations.”

Here’s more:
The success rate of properties under owner sale increased from 1% (2 sold out of 211 properties
put up for sale) in 2H 2013 to 2% (4 sold out of 167 properties put up for sale) in 1H 2014.

On the other hand, the success rate of mortgagee sale properties has fallen from 28% (5 out of 18 properties put up for sale) to 14% (12 sold out of 84 properties put up for sale) over the same period.

Total auction sales value was $13.8 million in 2Q 2014, or about 22.9 per cent lower than $17.9 million total transacted value in 1Q 2014 (see Exhibit 3). Nevertheless, the total transaction value in 2Q 2014 was still significantly higher than the transaction volumes from 2Q 2013 to 4Q 2013, which averaged $5.4 million on quarterly basis, reflecting the improved condition in auction market in 2014.

In terms of total sales value for 2Q 2014, residential sector accounted for 72 per cent ($10.0 million), while industrial sector made up 15 per cent ($2.1 million). The remaining 13 per cent ($1.8 million) consisted of shops.

Mortgagee properties made up approximately 73.9 per cent of the total sales value in 2Q 2014.