| A judicial sale is when the
lender has the property listed for sale under the supervision
of the court. If there are no offers from the judicial
sale, the lender can seek an order absolute of foreclosure,
therefore becoming the new owner.
The foreclosure process is quite complicated and your
ability to secure a good price will, in many cases,
depend on what stage the process is at. It will also
depend on your ability to choose a knowledgeable realtor,
whose expertise can guide you smoothly through the process.
UPSIDE OF FORECLOSURES
No fear of upsetting the vendor. In many cases
if you write a low-ball offer on a listed property,
the vendor may become upset and counter at full list
price, essentially telling you to go away. In a foreclosure,
depending on what stage it is at, the lenders or the
courts do not have an emotional attachment to the property.
They will either accept, reject or, in rare circumstances,
Good price. Sometimes foreclosures are priced
below market value.
Quick possession. In many case foreclosures
are vacant allowing for a quick possession. So, if you
need to start renovations right away, it is possible
to do so.
DOWNSIDE OF FORECLOSURES
No condition offer. Usually, if you wish to
purchase a foreclosure, a no condition offer must be
presented to the court for approval. This means you
cannot make the offer subject to a home inspection or
financing. You have to be absolutely sure you can obtain
financing to buy the property before tendering your
Property sold as is. When you write an offer
on a foreclosure you must sign a schedule A form. This
form specifies that you are waiving your right to litigation
if you take possession of the property and it is not
in the same shape it was when you originally viewed
it. It also specifies that lender or court makes no
warranties or representations that anything in the property
functions as it should. As well, none of the chattels
( fridge, stove, etc) are sold, conveyed or transferred
with the property. The property is sold “as is,
where is” and there is no guarantee that you will
get a survey or Real Property Report.
Multiple Offers. In many cases, when a foreclosure
is listed, there is a time period that offers must be
left open before they can be dealt with. Sometimes this
time period is as long as two months. Usually, during
this time period, a number of offers come in on the
property. It then becomes a multiple offer situation
where the best offer is accepted. The best offer may
well be over the asking price for the property.
Paying too much. When a lender forecloses
on a property there are costs involved such as legal
and realtor fees. Sometimes, if a lender hopes to recover
these costs, the property is listed at an asking price
higher than what it’s worth.
FIXER UPPERS, MOTIVATED VENDORS, DISTRESS SALES,
Sometimes you may find the best deal with other types
of properties. A vendor may decide to price a property
well because it needs major repairs and he or she is
not inclined or cannot afford to do.
If a vendor is getting transferred to another country
or province, for employment purposes, there may be some
motivation to take a reduced price on the property to
affect a quick sale.
If there is marital discord, a home may be priced below
market value as the couple may no longer wish to remain
in a home that has stood witness to bad memories.
In an estate sale, sometimes there are family beneficiaries
of the will who are more concerned with getting their
hands on their share of the cash than they are with
fair market value.
So you see, real estate deals come in many forms. If
you are working with an experienced realtor who can
help you determine vendor motivation, track deals as
they become available, and negotiate the best price
and terms, you have a much better chance of succeeding
with your investment goals.
If you have any questions or would like more information,
feel free to call Brian Braaksma, Sutton Canwest Vista,
278-9208. Usually, I can save you a lot of time by talking
to you for a few minutes to determine your real estate