Sutton Showplace Realty (2015) Chilliwack

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Buying Foreclosures: Keep These Tips in Mind

10 September 2019
Sutton Showplace Realty Chilliwack

Many buyers associate buying a foreclosure with getting a great deal on the purchase price, usually with a quick closing date. While this can be true, there are some important things to keep in mind.

The process for purchasing a home in foreclosure is different than a typical purchase. There must first be a firm unconditional contract agreed upon between a Buyer and the Seller. A court date will be set and the contract will be presented to a judge. At this time, other interested parties (who are now aware of the current purchase price) are welcome to attend court and present their best offer as well. The judge, at his/her discretion, then determines which offer to accept. All potential Buyers must have their deposit cheques ready, and be willing to commit to the purchase with zero conditions, and accepting the home and property "as-is, where-is".

The pros and cons differ depending on what stage of foreclosure the home is in. If you're aware of some of the pitfalls, it will help you to be more prepared during the purchase process. Hiring a Licensed Realtor, a Professional Home Inspector, and obtaining advise from a Legal Representative and Financial Lenders, are all important tasks to complete during this process.

A few things to be aware of:

  • If the Seller accepts your offer, you're not guaranteed to purchase the home because the contract will ultimately be, "Subject to Court Approval."
  • The Seller may not be able to negotiate a price that's lower than the outstanding balance of the seller’s mortgage(s).
  • It can be difficult to obtain a mortgage on a foreclosure; buying with all cash is a frequent occurrence. Make sure you have spoken with your lender prior to writing an offer. It's important to know your budget and to stay within in it, especially when there's an opportunity for other interested parties to present offers on the property as well. Discuss this with your Realtor and determine what your best offer will be so they can present it to the court on your behalf.
  • Foreclosures are sold "as-is, where-is", so it's not very likely that the Seller will complete any repairs prior to completion. Also, the Sellers /tenants may not leave the home in great condition, so be prepared to hire cleaners and potentially purchase new appliances, etc.
  • Keep in mind that being foreclosed on is a devastating and stressful time for the sellers, and they may still be living in the home during the process. Be respectful when viewing the home, and save your conversations for when they're not in your presence.
  • When the Seller is the Bank, they cannot provide disclosures as to property history/condition issues. It's very important to have the property inspected prior to committing to the purchase. Read the Home Inspectors report and have funds set aside to renovate or remediate any signs of mould, electrical issues, etc.

While the process of purchasing a foreclosure may seem daunting, consider hiring a Licensed Realtor to represent you and take some of that stress off your shoulders. They will walk you through the process and represent you with your best interests in mind. If a Seller is motivated to achieve a quick sale, that may also result in purchasing the home for below market value. Who doesn't want a great deal!

If you'd like to speak with one of our experienced Sutton Agents, please contact our office and we'll be pleased to introduce you. 604-858-1800