When buying a property, one of the most enticing options (when price is considered) can be buying a foreclosure. We brought in Michelle Perrault of Sutton West Coast Realty in Surrey BC to break down some reasons WHY and WHY NOT to buy a foreclosure.
Before you move forward in pursuing purchasing a foreclosure property you should consider the pros and cons!
Here are some of the reasons WHY to consider buying a Foreclosure in Canada according to Michelle:
- Price - Often because many clients do not know the process (going to court, making a bid, lending options) many buyers will shy away from actually moving forward with buying a foreclosure. Because of these points and more, buyers can often secure a property at a lower price than market value!
- Quick Equity - Building on the previous point, if you can purchase this property at a great price, often you can leverage the new found EQUITY to sell the property at a profit, re-finance to invest or even renovate or hold and enjoy the lower cost for similar properties.
On the other side, here are a few reasons why a Foreclosure may NOT be for you:
- As Is - When buying a foreclosure property, the bank makes no representations or warranties on the property. So if the previous tenant caused serious damage, there was some material defects (like a roof or hot water tank) or anything else, you would not have any recourse.
- No Items - If the property was owner occupied, it is very possible the owner could have removed the fridge/stove etc. since these are technically not part of the property the bank does NOT own them. You should always plan for the worst and budget for these items.
- Emotion - At the end of the day, you could have waited months for the closing date, had everything taken care of and someone can show up at court with a better offer. Best to leave the emotions aside on this type of purchase!
Foreclosures can be a great opportunity, though not for everyone. Make sure to talk to a Mortgage broker who knows which lenders will lend on them, how they work and be able to explain them. Also, consider a real estate agent who specializes in this property as they be able to coach you through the process.
Have any more questions?
E-mail me or call me 604-619-3319 we can grab a coffee and chat!