Foreclosure Sales

Buying a Foreclosure Property

Foreclosure Home For Sale Real Estate Sign

Many people think that in Canada you can buy homes in foreclosure far below market value. Not always the case as the courts tend to side with the owner rather than the bank when selling the home.

Steps to Buying a Foreclosure:

  1. What am I getting into here?
  2. How do I get my offer accepted?
  3. Who are these other people wanting to buy this home?
  4. What did I just buy?

What am I Getting Into Here?

The Bank of Canada requires that foreclosing banks attempt to get the most amount of money for each property. This involves appraisals and real estate agents with market evaluations.  Homes that are well kept and/or vacant will usually receive a value close to the other homes in the neighborhood. If the home is in poor condition, this too will be reflected in “market value”.  I can help you determine what the best market value for any given property is, regardless if it’s a foreclosure or not.

Buying a foreclosure involves a Contract of Purchase and Sale and a Schedule A. The Schedule A spells out that the property is being purchased “as is where is” and that the bank does not make any representations or warranties about the home.  These clauses are very different from a typical contract of purchase and sale between a buyer and a seller.  You need to have a very clear idea of what “as is where is” means. I will be happy to explain that to you.

How Do I Get My Offer Accepted?

Negotiating an offer with a bank usually takes quite a bit longer than working with a seller who’s looking to sell their home. Sometimes there is a lot of negotiating back and forth before price and terms are mutually agreed on. Any offer made to a bank on a piece of real estate has to also be “subject to court approval”.  This is because the court has the final say if an offer is accepted.

After your offer is accepted, and your subjects are removed, it’s filed at the appropriate law court and your accepted offer price becomes public knowledge.  A court date is set after this step, and is most often about 2-5 weeks after the filing.

Who Are These Other People Wanting To Buy It?

On the day of court, it’s highly recommended that you attend with your realtor. Often other buyers or Realtors will attend court with sealed bids to present to the presiding Master. These buyers will also have taken the time to check the court filing to find out the accepted offer price and usually their offer price will be higher than yours. This means that there are “competing bids” and if you’re wishing to be the successful bidder then you will have an opportunity to change your original offer.

The Master has the final say on which bid to accept and not only will be looking for the best offer price, but a quick possession date and a sizeable deposit made by way of certified cheque or bank draft accompanying the offer.

What Did I Just Buy?

Congratulations! The home is now yours and you will receive the keys on the possession date. Be aware that you had previously agreed to the Schedule A that the Bank included in the contract. There are no representations or warranties made by the bank and it’s imperative to understand that there is a possibility that the home will not look the same as when you viewed it last. Occasionally disgruntled homeowners may do damage when moving out or take unexpected things like, appliances, lighting, windows, doors and kitchen cabinets!

If you would like to receive real-time updates on all foreclosures in your price range and area of interest please complete the form below. Feel free to contact me any time if you have any questions.

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