Calgary Foreclosures... Getting Educated

Posted by Yvette Carman on Tuesday, November 3rd, 2015 at 12:21pm.

Are you awake at 3am watching the infomercials about planning your retirement or how you can get rich from foreclosed homes?? You are not alone.

A major misleading fact about foreclosures: Everyone thinks they go for "way below market value" but this isn't always the case; not in Canada anyway. This is a good thing, it would screw our market and bring down property values. Yes, there are those that go for a good/great price, just as re-sale and private homes can be purchased for a great deal. Every situation is different, it all depends on motivation.

The Truth About Foreclosures

When I have clients asking for "a list of foreclosures" my first question is WHY FORECLOSURES? The usual response is, "because I want a great deal". My advise, work with your price point, you would be surprised to know that most foreclosures are competitively priced and may come with high risk. GET EDUCATED before you GET EXCITED.

We have been seeing more and more foreclosures come on the market here in Calgary. There are a few types of foreclosures, the most common ones are Court of Queens Bench (Court Ordered Sale) and Financial Institution (Bank Sale).

Court Ordered vs. Bank Sales

Simply put - if the bank is the one selling the home, there is no equity. The bank hires a REALTOR®, the REALTOR® provides the senior negotiation for the bank with a Market Evaluation to market the property as though it were a regular sale. Once the price has been established it goes on the market. Once an offer is received, it is up to the senior negotiator to decide to accept, counter or reject the home buyer's offer. There is no emotion brought to the table. The sale is put in place.

If it is a Court Ordered Sale, there is equity in the sale. The listing process is much the same as any listing. The court hires a REALTOR® to provide a Market Evaluation and once the price has been established, the REALTOR® markets the property for sale. However, purchase process is not the traditional way of putting in the offer. Once the buyer writes an offer, their REALTOR® sends the offer to the listing REALTOR® in a sealed envelope. Typically there is a court date set for the judge to review all offers. They see if the home is priced below "Market Value" and what the competing offers are. The judge will review the offers and in some cases will reject all offers and ask the buyers to re-write their offers, "putting their best price forward". At that point, it's just numbers.

What the Calgary Home Buyer Needs to Know

The buyer is more then welcome to be present in the court room. I, as a REALTOR® representing buyers, encourage my clients to be present in case we need to re-write.

One thing to be aware of is the offer is accompanied by a Schedule "A" meaning that there have been deletions in the listing contract which usually pertains to the "Goods / Chattels" and/or the RPR (Real Property Report). If they are deleted, these items do not come with warranties or representations.

Some offers have NOT ALLOWED conditions - Financing, Home Inspection, and may not have condo docs. Buyers need to be prepared and know exactly what to expect. I personally tell my clients to be aware that not having a home inspection can be a high risk purchase (especially in the winter/colder months when the house has been winterized).

Ask the neighbors - if you really want the home and you are not able to do a home inspection, ask around. Get some history on the property. Neighbours are a great information source, they love to spill the beans. JUST KNOW.... foreclosures sales are AS-IS/WHERE-IS. Get educated!

INTERESTING FACT: What the general public does not know about a Court Order Sale is when all the associated cost with the foreclosure process are paid out and if there is equity remaining, the balance is released to the defendant (previous owner).

If you have any questions or would like more information on foreclosures, send me an email, text or call me. I would love to share more details and guide you through the process. You can contact us online or call 403-536-9031.

7 Responses to "Calgary Foreclosures... Getting Educated"

LISA SHEFSKY Canada Mortgage Coach wrote: Great informaiton Yvette!! From a financing perspective, the buyer of foreclosure properties needs to understand and be prepared for lenders to look for extra comfort / confirmation that the property is in decent to good condition. Some of the documents that lenders are asking for nowadays to confirm a foreclosure property is safe for them to lend on are: an independent appraisal report, ordered through a 3rd party like Solidify or NAS + a Home Inspection by a qualified and licensed inspector + possibly Environmental studies (air quality tests for mould, asbestos, etc) + Structural Engineering Reports (in the instance the appraisal or home inspection noted anything questionable). These conditions imposed by the lending institution not only can add extra costs to the purchase, but also require additional time to meet financing conditions (if allowed).

If you'd like more details about the above, and for great mortgage financing service, please contact Lisa Shefsky, Canada Mortgage Coach at: 403-237-5472 or: lisashefsky@invis.ca

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