If you’re looking to save money on your next home purchase – or find a great property to flip – then buying a foreclosure can help you to get a good deal. Buying foreclosures may have had negative connotations in the past, but it’s a great way to get a decent property if you’re careful. So how can you make a successful offer on a great foreclosure property? Here’s what you need to know.
All Foreclosures are Sold in “As-Is” Condition
In the province of British Columbia, all foreclosed properties that are up for a court-ordered sale are sold as-is. Given that the mortgage lender is selling the property, it’s unreasonable to expect the seller to know about any and all issues the home might have. You’ll need to pay for a home inspection and investigate zoning and title issues prior to the sale in order to truly know what you’re getting yourself into. This can also be useful when it comes time to make an offer on the home.
Low-Ball Offers: Sometimes They Work, Sometimes They Don’t
Oftentimes, buyers will attempt to buy a foreclosure because they believe they can get the home for below fair market value. But what these buyers fail to take into account is the fact that the lender, the homeowner, and the court all have a vested interest in selling the property for as close to fair market value as they can. Here in British Columbia, it’s very rare to see a foreclosure sell for less than 80% of its fair market value. In some specific instances a low-ball offer could succeed, but it’s still a risky move – it’s very easy for someone else to outbid you.
Multiple Offer Situations: The Court’s Sealed Bid Process
There are multiple steps involved in buying a foreclosure, and multiple parties that need to view the bids. The first step is usually to submit a bid to the real estate agent responsible for listing the property, who will forward the bid to the mortgage lender. Once a bid is accepted, the lender will set a court date and the listing agent will publicly disclose the amount of the offer that was accepted. On the day of the court hearing, anyone interested in buying the property can come to court and place a higher bid, which is sealed from public view. In the event that there are multiple offers before the court, the buyer with the highest offer will be awarded the property.
Buying a foreclosure can be a risky process, but it’s easier with the help of an experienced real estate agent. Call Kirk Chamberlain and Associates at (778) 476-7778 to learn how you can buy a foreclosure with confidence.