Freshwater then rented it for $1100 per week, despite a valuer noting it could command $2000 on the open market.
And although Freshwater was involved in choosing the property - specifying Parnell as her preferred suburb - the home was not formally considered part of her employment terms.
Education Minister Chris Hipkins subsequently labelled the deal "very disappointing", and staff and students called it a "slap in the face".
The university today said it would not be commenting on the home's sale.
It earlier denied the decision to sell the luxurious home was linked to Auditor-General John Ryan's report, instead saying a sale was the "right thing to do".
The cash-strapped institution also said it would sell the mansion to help offset the "significant" financial hit wrought by the Covid-19 pandemic.
It came after the home's purchase - exclusively revealed by the Herald in January last year - immediately led rankled staff and students to voice their disapproval over its bad look.
The university paid $5.06m for the property - $1.5m above its council valuation - that boasted manicured gardens, 338sq m of floor space across three storeys and a spa and lap pool.
It then spent a further $160,000-$170,000 repairing the roof and swimming pool.
The deal later caught the eye of Auditor-General Ryan, who said it involved "sensitive expenditure".
That meant the partly taxpayer-funded organisation ran the risk of being seen to give "disproportionate" benefit to Freshwater above the university's own business needs, he said.
He also called on the university to consider whether Freshwater's rental discount should be treated as taxable income under the Income Tax Act.
The University of Auckland subsequently apologised to vice-chancellor Freshwater for getting her embroiled in the backlash.
Chancellor Scott St John - chairman of the university's council of directors - said media criticism of Freshwater was "grossly unfair and wrong".
"It was not her decision to purchase the property. Nor was she party to developing the terms and conditions of the tenancy agreement."
The education institution also commissioned two independent reviews by consultants KPMG with the aim of improving its "review systems, processes and controls" related to tax and so-called sensitive expenditure compliance.
