Purchasing a Foreclosure / Bank Owned Property
Posted by Joel Gwillim on Monday, March 11th, 2013 at 2:30pm.
Foreclosure, typically a word that makes real estate investors salivate. But wait a second, are they always a smokin’ hot deal like most assume? Yes and no, so let’s look into a couple scenarios. I have represented buyers in both bank owned sales and also Court of Queen’s Bench sales, is there a difference? Definitely.
In regards to bank owned sales you can sometimes have conditions, allowing you the buyer, time to check out things you would naturally do in regular transaction [approval of financing, home inspection, document review, etc]. You’re also allowed to propose an ideal possession/move-in date, which undoubtedly helps with timing, plans to move, current leases, etc. There usually is a schedule or two which needs to be initialed and sections of the contract removed, but hey this is just the bank covering themselves from a site unseen property where they want everything ‘as-is, where-is’. Get used to that term if you’re planning on being a regular foreclosure guru. Anyway, you submit your offer and see what the bank representative handling the file has to say. Don’t be frustrated if you don’t hear a response back for a day, or two…or three, it’s just part of the process as they have to run the numbers through a higher power in the company. All in all, just remember to do your due diligence and make sure the property is good value based upon your offer, that you don’t have to sink too much money into it to make it livable, and there aren’t surface things you’re missing when combing over the property. Remember the banks aren’t offering any warranties or representations on anything, inside and out.
Court of Queen’s Bench sales are generally a little different. The same goes with the ‘as-is, where-is’ sale mentality where they’re not claiming responsibility for anything cosmetically or structurally. But you the buyer have to come in with a clean and easy purchase agreement, as they basically just want to sign it back, done and done. No conditions, no choosing your possession…essentially if they accept then you’ve bought it! This is a situation where you want to get your home inspection, financing arranged and any documents reviewed PRIOR to going forward with any sort of offer. The negative about that? You will be coughing up money without even knowing if you’re going to win and actually get the property. It’s a risky play, so that’s why you want to have everything checked out, including the current value and perceived value of the property.
Forclosure Pros // the ability to acquire a property under value.
Forclosure Cons // having to spend money on pre-offer research, remedy work usually required to make the property liveable, as-is, where-is situations where there is no warranties or representations regarding the property, sometimes not being able to have a safety net with a buyer's condition, sometimes not being able to suggest your desired possession date.
Real Estate ‘deals’ don’t hit us in the face every day, so like in all things in life, if it seems too good to be true, it probably is. If you're a more safe and traditional consumer, maybe negotiating with an actual seller via their Realtor is the route for you. As seen above, purchasing a foreclosure can definitely be a risk + reward situation for those savvy buyers, just make sure you follow the steps outlined and seek help from a Real Estate professional. Any questions or concerns on this topic, or if you want to start the process on finding a foreclosure property, feel free to contact us.
To your Real Estate success,
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