Foreclosures tend to have a poor reputation in Canada. Unlike their American counterparts, Canadian foreclosures have to be sold close to market prices, making house flipping in the hundreds of thousands almost unheard of. In addition, foreclosures often come with red tape and may require extensive repairs.
Despite all this, the foreclosure market is highly competitive. Investors have learned that, with the right real estate agents by their side, buying foreclosed homes can still be lucrative.
Are you looking to invest in foreclosures in Calgary? The Mel Star Team can help. Our seasoned Calgary Realtors® have access to many foreclosures in the region before they hit the multiple listing service (MLS), can educate you on the pros and cons of investing in foreclosed homes, and can help you navigate the entire purchasing process一saving you both time and money.
Risks Of Investing In A Foreclosed Home In Calgary
The Canadian foreclosure purchasing experience is radically different from what is portrayed in the US. Rarely will a Canadian be able to buy a foreclosed home for 50 cents on the dollar; federal law stipulates that foreclosed properties must be sold close to market prices. In other words, an investor looking to make a quick buck by buying a foreclosed home low and selling it high is likely to be sorely disappointed.
Moreover, foreclosures are often sold as they are and sometimes in very poor condition. This makes them difficult to resell right after, as their dilapidated state could turn off would-be homeowners. Investors who have just bought a foreclosure could find themselves liable for expensive repairs and end up paying more than what they would have spent for a normal listing.
Finally, buying a foreclosure also means inheriting all the problems the previous owner had. Zoning problems, boundary disputes with neighbours, and potential health and building code violations are now your responsibilities.
A Foreclosure Could Still Be Worth It
However, with adequate preparation and expert counsel, securing a return on investment on a foreclosure is still possible.
One important factor to keep in mind is competition. Because there will always be investors trying to make a profit off such properties, foreclosures in Calgary can be in high demand. This in turn may drive the costs of these homes above market prices. The investor trying to cash in on foreclosures should be looking for homes that do not command much competition from buyers but can still be desirable on the market with the right renovations. Such hidden gems may be difficult to find, which is exactly why Realtors® and their deep knowledge of the housing market are so coveted in the hunt for foreclosures.
Because foreclosures in Canada are rarely priced significantly below market price, most investors make their money off these properties by growing or riding their value. One way to do so is to invest in home renovations. By embellishing and improving the property, you may be able to sell it at a price greater than the original foreclosure price and the amount spent on renovations.
Alternatively, you can simply wait for the value of your property to increase naturally before selling it. This strategy is especially attractive if you can secure a foreclosed home in a neighbourhood expecting significant urban development. The problem is that few people can predict real estate prices in the upcoming years with high certainty一even if past trends seem to indicate a steady increase for the foreseeable future. Here again, the counsel of seasoned a Realtor® can prove invaluable.
Making Your Foreclosure Investing A Success
Investing in a foreclosure in Calgary can be risky business. Canadian law does not allow a large margin of profits off foreclosures in the first place. Additionally, high competition and potential repairs may end up driving the costs of your purchase so that there is very little or no profit to be made.
The truth is that only a select few foreclosures are winning tickets. These are the properties you can purchase for slightly below market price but have the potential to sell for an exponential amount with some renovations or over time. These are the ones you want to invest in.
The Mel Star Team can help you identify these diamonds in the rough. With over 40 years of experience managing house sales in Calgary, our real estate agents know the local housing market inside out. Not only can our team locate promising foreclosures, we will also walk you through every step of the way so that you feel 100% confident in your decision. Call us at (403)-861-9944 or fill out the online contact form to get your foreclosure hunt started.
FAQs
Q: What Is A foreclosure?
A: A foreclosure property is a bank-owned home that is for sale. The previous owner was unable to meet their mortgage payments, therefore the bank repossessed the home and is selling it to recuperate the money still owed against the mortgage.
Q: Can you finance a foreclosure property?
A: Yes, you can. However, banks may find all-cash offers more attractive.
Q: Do I pay any fees when I use a buyers agent?
A: No, you do not. The seller's agent will split the commission collected from the seller with your real estate agent.
CONTACT US
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