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Everyone is always looking for a good deal. Whether it’s when buying a car, clothes, groceries and even gas. We all know how many of us make the trip to the south of the border to save $20-$30 dollars per fill up. But in this blog I am not talking about the gas prices now a days. There is not end to that barrel of grunts per fill up.
As of March 5, 2012, there were a combined 385 residential listings that were court ordered sales ranging from Greater Vancouver Region to Chilliwack . Now a common misconception about foreclosures is that the homes are listed $100,000 or more under market value. The word ‘foreclosure’ triggers different emotions in different people. For sellers it’s probably the worst phase of their life. Therefore we all need to show some compassion towards them.
But this blog is for all the buyers in BC who are looking to invest in a foreclosure. Here are few questions that I get asked everyday in my job by Buyer.
Q: Is there any additional costs when buying a foreclosure vs buying directly from Owners?
A: No. The cost of buying a house directly from Owners is same as cost of buying a foreclosure.
Q: Are all foreclosures fire sale?
A: No. Not at all. In fact, a lot of foreclosures sell for market value. But there are always good deals in the market. Contact your local realtor for a list of foreclosures in your neighbourhood.
Q: How do I purchase a foreclosure? (Scenario 1 when there are no competing bids)
A: Well, to begin with; find a house that you like. Ask your realtor to request for a ” Schedule A”** from the listing party. If there is no accepted offer on the property, you could present a subjected offer to the listing party. After your due diligence period, once all your subjects are waived or satisfied, you need to provide a deposit as stated in the contract that will go in the stakeholders In Trust Account. The listing Party’s Lawyer will follow the necessary procedures to register the offer at the court and a court date is scheduled to obtain a Court Approval for the sale of the property. Because the offer is registered at the court, the purchase price , closing date and any other information regarding the offer becomes public information.
On the day of the Court date, if you have no competing bids then you get the property. Easy!
Q: How do I purchase a foreclosure? (Scenario 2 when there are competing bids)
If there are other interested parties present at the court on the day of court approval, then all the parties have to submit their subject free offer along with the deposit in a sealed envelope. They have to hand over their offers to the listing agent before the court proceedings begin. The listing agent then informs the original buyer that there are competing bids and the original buyer offer his best offer in a sealed envelope and hand it to the listing agent.
The lawyer hands over all the offers to the Master. who reviews all the offers and usually awards the property to the highest bidder.
All the other bidders receive their offers and their deposit cheques back after the court proceedings. While the winning bidders get to complete the deal according to the dates mentioned in the contract.
Q: Does the Court Order Override the Residential Tenancy act?
A: Yes. The tenant has the right of proper notice to vacate. Under the existing legislation, once a foreclosure action is launched, if the tenant is named as a party to the action, the parties are not bound by the legislation.
Q: Is there risks involved with purchasing a foreclosure?
A: Yes. An Owner may even purposely cause damage to a property by tearing out fixtures or cabinets, taking out glass windows, removing a furnace, etc. There acts obviously diminish the value of the property. Lenders who show that the owner warrants expedited foreclosure, by virtue of such malicious wasteful acts, can have the usual “equity of redemption” period of six months reduced to a much shorter time. The owner can also be charged with willful damage under the Criminal Code.
Q: Should I invest in a foreclosure?
A: Yes. Contact your local Realtor and consult him/her regarding the foreclosures in your neighbourhood of interest. But keep in mind to hire someone who has some experience in foreclosure dealings before.
If you have any other questions regarding court order sales or proceedings, feel free to ask. Hope this blog helped you to get some answers for of your questions regarding foreclosures.
**Schedule A is a 1 to 3 pages documents drafted by the banks lawyer stated that the buyer will take the house in “As is Where is”. Incase there is any damage done by the tenants or owners of the premises upon leaving the bank will not take any responsibility.