Foreclosure properties can often be acquired at a reduced rate from the bank. You may be able to save a lot of money, but there are a lot of hurdles that you should be aware of. Here are some of the Pros and Cons of buying a foreclosed home or a court-ordered sale. A foreclosed home may be listed with a bank, or with a mortgage insurance company. Court-ordered sales have some of the hurdles of regular foreclosures plus a few extra.
1) GETTING A DEAL: The main, and basically, only reason you would want to buy a foreclosed home or a court-ordered sale, is to get a deal. You can sometimes save several thousands of dollars buying a foreclosure.
1) AS IS WHERE IS: When purchasing a property that is under foreclosure, you will likely need to sign a Schedule A.
Schedule A basically states that there are no guarantees that the property will be in the same condition when you take possession, as it is when you make the offer. If there is a flood or a natural disaster, or if someone puts holes in the walls, you are not protected. You also cannot negotiate for the seller of the home to fix things before you purchase the home. Also, if there is garbage in the home and in the yard, it is likely not going to be cleaned up. You will be stuck doing all the cleaning.
2) SEEING THE PROPERTY: In some cases, you may not even be able to see the inside of the property. If you do, it could be uncomfortable if there are still tenants or the original owners of the property are still living on the premises.
3) REAL PROPERTY REPORT: Banks and the Court will most likely NOT provide a Real Property Report or Letter of Compliance. A letter of compliance from the city will cost around $150, and a Real Property report is about a $600. You may be able to close on the deal with title insurance which is about half the cost. However, if you should decide to sell the home in the future, you will likely need to provide a Real Property Report.
4) CONDITION: Often, a foreclosed home is in poor condition. It may have been neglected for many years, and there is likely thousands of dollars of repairs that need to be done. Banks will normally not spend any money to clean the home.
5) APPLIANCES: The bank may have a mortgage on the home, but the bank does not technically own the appliances. When you buy a regular home, most of the time the appliances are included. With a foreclosure, there is no guarantee that the appliances will be there on closing.
LETHBRIDGE COURT ORDERED SALES
Court-ordered sales are usually much more difficult and time-consuming than foreclosures. In the case of a court-ordered sale, there may be some equity left in the property. Title will still show in the owner’s name. The court may start sale proceeding for many reasons; the owner has stopped making payments, the owner is deceased and stopped making payments, or there is a divorce and one of the spouses has forced the other spouse to sell the home so that they can get equity out of the home.
For a court-ordered sale, the pros and cons listed above for foreclosures also apply. However, there are a few other things to consider.
1) CONDITIONS: The court will often not accept offers that are subject to financing or subject to a property inspection. So you may need to have the money already in place before you buy a foreclosed home. We are happy to assist you by introducing lenders that can help you get your financing approved in order to write an offer. You may also want to have a property inspection before you write an offer if you wish.
2) TIME: It can be quite a time-consuming process buying a court-ordered sale home. You may need to put down a significant deposit if you are part of a bid, even before you know if your bid has been accepted. Court dates can be 2 or 3 weeks away from when you submit your bid (this is taking longer during the COVID-19 pandemic). That may mean that you are tied to one home during this time and are unable to pursue any other great deals that may come up in the meantime. If you make an offer that the bank finds suitable, they will set a court date to present it before a judge. It is the judge that has the final decision whether a sale will go through.
3) POSSESSION: The judge will set the possession date of the house. The buyer has little say in the possession date.
4) NO RULES: When you deal with Real Estate in Alberta, there are several rules that buyers and sellers have to follow. However, in the case of a court-ordered sale, the rules of the court surpass any of the rules in place with Alberta Real Estate governing bodies.
Lethbridge does not have many foreclosures. Often you may come across advertisements for listings of foreclosed properties. These ads come out of the United States, where foreclosures are quite common. In Lethbridge and Canada in general, lenders are very strict when approving mortgages, which greatly reduces the occurrence of foreclosures.
If you are looking for a great deal in Lethbridge Real Estate, there are many more options. Often there are fixer-uppers available, or people who HAVE TO SELL quickly because of a move to another city, a divorce, or are motivated sellers because they have already purchased a new home.
We keep track of Lethbridge area foreclosures. For a list of these homes, please feel free to send us an email at firstname.lastname@example.org or give Justin a call at 403-327-8001. You can also subscribe to Justin’s weekly Lethbridge Foreclosure List.