Kelowna Real Estate Blog – Paige Guernsey

Buying a Kelowna foreclosure

Posted by paige on November 23, 2011 | No Comments

HOW TO BUY A FORECLOSURE

There are many misconceptions in the buying public regarding a foreclosure.  Most think you can get a price on a house that’s far below market value. Not always so.

4 MAJOR STEPS

1) Know what you’re getting into

2) Getting your offer accepted

3) Court Acceptance

4) Possession

KNOW WHAT YOUR GETTING INTO

The Bank of Canada requires that foreclosing banks attempt to get the most amount of money for each property. This involves appraisals and real estate agents with market evaluations.  Homes that are well kept and/or vacant will usually receive a value close to the other homes in the neighborhood. If the home is in poor condition, this too will be reflected in “market value”.  I can help you determine what the best market value for any given property is, regardless if it’s a foreclosure or not.

Buying a foreclosure involves a Contract of Purchase and Sale and a Schedule A. The Schedule A spells out that the property is being purchased “as is where is” and that the bank does not make any representations or warranties about the house.  This paperwork is very different than a regular arms length transaction in what we’ll call a “normal” transaction between a buyer and a seller.   You should read it carefully and have a very clear picture of what “as is where is” means.

GETTING YOUR OFFER ACCEPTED

Working with a bank on offers usually takes quite a bit longer than working with a seller who’s looking to sell the home they are living in. Consider there may be a time difference and different levels of management the paperwork has to go through before any type of acceptance or counter offer is made.  Also, banks are generally closed on the weekends.  Banks generally get “low ball” offers and most often there is a lot of negotiating back and forth before price and terms are met that are mutually agreeable.  They don’t like to see a lot of “subjects” but it is possible to get an offer accepted with some subjects.  Any offer made to a bank on a piece of real estate has to also be “subject to court approval”.  This is because the court has the final say if an offer is accepted.

After your offer is accepted, and your subjects are removed, it’s filed at the appropriate law court and becomes public knowledge.  Most Kelowna foreclosures happen at the Kelowna Law Courts, but sometimes they’re in Kamloops or Vancouver. A court date is set after this step, and is most often about 2-5 weeks after the filing.

COURT ACCEPTANCE

On the day of court, I would HIGHLY recommend that you attend with your realtor.  Often other buyers will attend court with a sealed bid to present to the presiding Master.  These buyers will also have taken the time to check the court filing to find out the accepted offer price and usually their offer price will be higher.  This means that there are “competing bids” and if you’re wishing to be the successful bidder then you will have an opportunity to change your original offer.

The Master has the final say on which bid to accept and not only will be looking for the best offer price, but a sizeable deposit made by way of certified cheque or bank draft attached to the offer.  For possession, a successful bidders Contract of Purchase and Sale will usually read a certain number of days after court approval. For instance, it’s advisable to put “10 BUSINESS DAYS AFTER COURT APPROVAL” on the contract for Completion, Possession, and Adjustment dates.  This allows for regular banking hours and weekends.

POSSESSION

After all that, moving day is here!  Earlier we talked about the Schedule A and that there are no representations or warranties made by the bank.  Although moving in on possession dates usually go smoothly and hold no surprises, it’s imperative to understand that there is the possibility that the house won’t look the same as when you viewed it last. Occasionally disgruntled homeowners may do damage on moving out or take unexpected things like kitchen cabinets!

With so many details surrounding foreclosures, it’s critical to work with someone who knows the process.  If you’re considering purchasing a Kelowna real estate foreclosure, call Paige Guernsey direct at 250-862-6464. With many years experience around foreclosures and court ordered sales I can help you navigate the sometimes bumpty waters to a successful conclusion!  If you’d like a list of current homes for sale in Kelowna that are under foreclosure, send me an email at paige@kelownahome.com.

Talk to you soon…

Paige