KEY POINTS:
The lady's just got a bargain and the smile tells it all. Not as big a bargain as she would have liked, but she's done all right. The hugs and handshakes, plenty of them, are the happy endorsement of money well spent.
As this winner is celebrating her
good fortune, out in the suburbs someone with a desperately keen interest in the transaction is probably waiting for a phone call. When it comes, there'll be no smiles. Tears, more likely, if there are any left. So much for the New Zealand dream.
We're talking houses here - often very cheap houses, at prices that mean one person's delight is adding to another's distress.
Depending on where you sit, nothing can be as sweet - or as bitter - as a mortgagee sale.
At one end there are the big banks that want their money back, the ugly "your pain, their gain" adverts and the investors who talk about their vulture funds.
At the other end, perhaps it's a young couple with kids, already battling the interest rate spiral when redundancy or poor health come knocking. For them, the applause that follows the fall of the hammer must seem a cruel jab in a supply-and-demand world that serves up a loser with every winner.
It's tough, and if you doubt that, take a look at today's real estatesection.
A year or so ago, you might have found six or eight mortgagee sale advertisements hidden away as the property boom hovered around its peak. Today the glum black-and-white pages in a sea of real estate colour paint a different picture.
No fresh national statistics are available on house sales forced by mortgage holders through auction and tender. But when the economy dips, more home-owners come under pressure - and some are sitting now, preparing for the phone call to tell them if any money is left over for their pockets once the bank has taken its slice of a collapsing asset.
New Zealand is in a serious real estate downturn within a wobbly economy, and standard sales are running at less than half the levels of the peaks of the 2002-2006 boom.
But mortgagee sales are galloping away, more than doubling over the last few months, and everything suggests they will continue to mount well into next year.
People who bought on small deposits in the past year or two will now find they owe more than their house is worth - not the end of the world if their income stays up and they can batten down the hatches until the return of something called capital gain.
After all, houses are for living in, not just to make money from.
But under-pressure banks are not noted for their sympathy if repayments don't come in on time, although some will help keep clients afloat if there is promise in their circumstances.
When a sale is forced, the bank effectively becomes the seller, looking to get back all it is owed but required by law to show a duty of care in obtaining a reasonable price - so that the property owner gets back as much as possible.
Auction and tender are the best ways of satisfying that duty, but reserves will always be less - often much less - than a sale under normal market conditions.
A low reserve and expectations of a bargain are important ingredients in a mortgagee sale because, for the would-be buyer, it's the reward for the risks and hassles involved.
To start with, the mortgagee holds the upper hand. The contract is usually totally unconditional, with no opportunity to escape via a LIM or builder's report. And forget about a warranty that the property complies with building regulations.
Easy - get all that stuff sorted out in advance. Fine, except it could be money down the drain if, as is quite common, the debt is paid and the sale is withdrawn. Or even worse, if the agreement leaves the door open for debt-repayment right up until settlement date.
Then, among other issues, there's the problem of getting a good look at the property. A tip-toes peak through windows may be the best due diligence available if, as is often the case, tension is high.
And only a sheer optimist should expect a chattels list in a mortgagee sale agreement. On settlement day there'll be no guarantee that the drapes, carpet and hot water cylinder are in the house.
But for growing numbers of people the risks and the pre-sale homework are worth taking when the smell of a bargain is in the air.
The Weekend Herald found packed, lively audiences when it sat in on three successive mortgagee sales at Barfoot and Thompson's downtown Auckland auction rooms this month.
Plenty of people and a few bargains - but more often than not some discomfort for the banks.
Of the 33 properties advertised to go under the hammer, 10 were withdrawn or postponed - indicating last-minute debt repayments, or at least the promise of that.
But of the 23 homes offered over the three days, only six sold, two of them at well above reserve price, suggesting the original owners were at least getting something after the banks had taken their whack.
But the bargain hunters wouldn't be moved on the other 17 properties, which all fell well short of reserve.
As their profit forecasts are suggesting, the banks are facing some testing times.
The people now without a home aren't the only ones who will be taking a hit in the months to come.
