Whether you are looking to buy your first home, looking to flip and sell, or looking to purchase a rental for revenue, you may be considering purchasing a foreclosed property. When a bank forecloses on a home, it means that the owner was in arrears on their mortgage, prompting the bank to sell the home. The bank wants to sell the home as soon as they can to recoup the money tied up in the outstanding mortgage. Buying a foreclosed home could offer many benefits including:
- Significant savings
- Opportunity to capitalize on seller concessions
- Higher return on investment
Want to know more? Contact Our Calgary Realtors
Judicial vs. Power Of Sale Foreclosures In Canada
Judicial foreclosures are only available in Alberta, British Columbia, Manitoba, Saskatchewan, and Nova Scotia. The lender (bank) will file a lawsuit against the homeowner for their missed mortgage payments and the ownership of the property and certificate of foreclosure will be transferred to the lender. The judicial process involves the intervention of the courts and can take many months or even years for the process to be completed. The proceeds of the foreclosure will first go towards paying off the missed mortgage payments, then to any lien holders, and finally the rest to the borrower/homeowner. The judicial process is uncommon in Canada as it is very costly and time-consuming.
Power of sale allows the bank to foreclose on a property without the intersection of the court system. This type of foreclosure is most likely to result from a resolution between the lender (bank) and the borrower (homeowner) without the need to go to court. The order of payout is the same as judicial foreclosure, however, if the property sells for less than expected and cannot cover the missed mortgage payments, the borrower will still be on the hook to pay off the rest of the balance of the mortgage.
3 Things To Consider Before Buying A Foreclosure
Auctions Are Competitive
Buying a foreclosure at auction can be extremely challenging and competitive since you will be bidding against industry professionals like realtors and others who buy, flip, and sell foreclosures for a living. The extremely low prices of foreclosures attract many individuals looking to make an investment in the real estate market. You will not be dealing with traditional homebuyers, instead, you will have to compete against investors. Investors often make all-cash offers with little to no contingencies making their offers more attractive to the bank. Something else to consider is that you will not be able to finance the property with traditional methods and will likely be required to make an all-cash offer.
Foreclosures Cannot Be Inspected At Auctions
You will not be able to tour the property or inspect it before you make the purchase. Foreclosures are sold “as is”, preventing you from learning if there are any serious problems or damages to the property that you cannot see from the street view. The risk is that repairs could be extensive and end up costing you more money than you had anticipated.
Watch Out For Repair Costs And Liens
With so many unknown factors, you may be faced with repairs and maintenance costs that incur in order to make the property livable. The likelihood that costly repairs that may not be disclosed are very high, so keep your budget flexible to be prepared for anything that may come your way. The most common foreclosure issues are related to plumbing and structural problems. Not only do you have to incur repair costs, but you will also have to incur liens placed on the property. Some of the most common liens include contractor liens where they completed a renovation but are still owed money and divorce decrees.
Want To Know More About Foreclosure Opportunities In Calgary?
Do you want to buy a foreclosed home but are not sure where to start? With over 40 years of experience in the Canadian Real Estate Industry, our team of realtors know first-hand the uncertainty and difficulties that could arise when buying a foreclosure. Our skill and expertise will make the process as seamless and stress-free as possible and ensure that you are getting the best deal on your new home. To get in touch with The Mel Star Team fill out our online contact form or call 1-403-861-9944.
FAQs
Where do I find foreclosure properties for sale?
The best way to find a promising foreclosure is through a realtor. The Mel Star team has over 40 years of experience in the Canadian real estate market, specializing in foreclosure properties. To learn more about how our top Calgary realtors can help you find a foreclosed home for great value contact us today. Alternatively, there are many websites online that list foreclosure properties such as ForeclosureSearch Canada.
Can I get a mortgage on a foreclosed home?
Yes, you can. Once you have found the best mortgage rate and have been pre-approved, you will be ready to enter the exciting world of foreclosure homes.
When can I buy a house after foreclosure?
As soon as a foreclosed home goes on the market, you can buy it right away. You can make an offer at any stage of the foreclosure process, but it is important to remember that foreclosure sales are final and are sold in “as in” condition
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