The F-word in real estate.
Everyone is curious when they see “Court Ordered Sale” or “Foreclosure” in a listing they find while browsing homes. I completed the Greater Vancouver Real Estate Board course on Foreclosures. I will take you through the foreclosure buying process in British Columbia, and hope to set straight some of the common myths about foreclosure.
Foreclosures are always a bargain, right?
Buying a foreclosure listing is not as simple as buying any other house, and there is a processes to follow if you want to be successful and legal steps necessary before a court can order the property sold.
The important thing to remember about foreclosures is that they are market-value transactions, in most cases. If a foreclosure is listed at a bargain-basement price, chances are it’s for a good reason, needing repair or maintenance. Also, at court, anyone can show up with an offer on the property, so sometimes an auction-like situation is created at court.
How is an offer on a court ordered sale different?
When you offer on a regular listing, typically, your REALTOR® will insert several clauses in the offer to purchase that allow you to do your due diligence on the property – inspection, approval for financing, research on the title, etc.
So, your REALTOR® prepares the offer on a foreclosure, and it is submitted to the lender for consideration. A typical back-and-forth negotiation will likely occur and agreement is reached.
The foreclosure difference….When you offer on a foreclosure, the offer which includes a Schedule A (which amends the regular Contract of Purchase and Sale) is submitted to the lawyer. During this period the lender and the purchaser will negotiate a price they are both satisfied with and set a court date for the offer to be approved (typically, 2-3 weeks from acceptance of your offer).
In most cases, you’ll need to have your “ducks in a row” ahead of time – you must write an offer subject only to court approval. This means spending money on an inspection, appraisal if necessary, and getting your bank to approve the financing of the property, prepare a bank draft and remove all subjects in regards to the lender. This is now a subject free offer as far as the buyer and the lender are concerned. all before you have a contract in place. However, there is one last subject which is "Subject to Court Approval". This represents a little bit more risk than a typical sale, because somebody else could offer on it or show up in court after your offer is accepted.
At Court the listing agent will collect all, if any, competing offers which must be subject free, contained in a sealed envelope, include a schedule A addendum, and be accompanied with a certified deposit cheque or bank draft.
When the judge (Master) may give the owner one last time to redeem the owner's mortgage and any other outstanding debts. If there is no attempt to pay off all the debts she will proceed with the offers to purchase the property.
Should there be multiple offers, whoever has the highest subject free bid in the sealed envelope will most likely be awarded the property. Depending if the property is vacant or owner occupied, the completion and possession could be after the court date will be somewhere between 2 to 8 weeks.
It is strongly recommended that the purchasers are present in court to either up their bid or be present to initial any changes that the judge may request. There are NO second chances for anyone after the judge has made her decision and there is NO chance to back out of the contract.
The property is now SOLD and all documentation is forwarded to the parties involved for conveyance.
Looking for a list of foreclosures in Great Vancouver, please email firstname.lastname@example.org