properties in Calgary?
People looking for a great real estate property have high hopes of getting one that is a sweet deal! One that makes them a ton of money and feeds that “get rich quick” hunger.
To start, they read books on how to find them. Then when that doesn’t pan out, they attend investment seminars that fill your mind with great possibilities. What they seem to leave out is that hunting for this great real estate property is much like gambling. Sometimes you win and sometimes you lose. They also don’t tell you the risk and the time commitment to finding these distressed properties.
Well, I’m going to save you money and give you the honest truth about real estate deals, for free!
First let me explain the process of these two types of property ownership:
Court Ordered Sale
Often a court ordered sale comes about because of bankruptcy or a messy divorce. The court takes the property away from the owner so that they can sell this asset (the home and land) and pay off all the people and businesses who are owed to by the owner. Obviously this is not a pleasant situation and no one wants to endure this.
Once the court has gone through the process of appraising the property, they usually hire a real estate agent to list the property on the multiple listing system (MLS) to sell it.
If you are interested in putting an offer in on this type of property there are certain details you’ll be made aware of.
- You will not receive any support documents to help complete the sale – real property report and/or condominium documents
- Your offer has to be clean. In other words no conditions. You’ll have the opportunity to have a home inspection, although this is prior to putting in the offer. As for your financing, this needs to be arranged before hand, as well.
- There maybe expenses that the funds from the sale of the home won’t pay for. In this case, the buyer will be responsible for outstanding taxes, HOA fees, and possibly mortgage interest.
- This property is sold “as-is-where-is” which means that when you take possession of the property it will be the same or worse than when you last saw it. There maybe damage to the interior, appliances aren’t working or missing, the hot water tank flooded the laundry are, etc.
Now once the first offer comes in, the agent will contact the lawyer and a court date will be set. The court date is typically 30 days from the first offer. During this time other offers may come in. This means more competition for you and uncertainty of your success, since you won’t know how strong the other offers are. It’s also a good idea not to put offers in on other properties, just in case you get awarded this one.
When the court date arrives, you’ll be in attendance to hear the result. The Judge looks at all the offers and awards the property to the most favourable buyers. If you’re chosen, then great! If not, back to the drawing board.
Foreclosed properties come about because the owner isn’t making mortgage payments for an extended period of time. It can also be because of a condo owner not paying for the special assessment on a condo building.
After the lender has made several attempts to get payment for the mortgage, it will go through a process of preparing the property for sale. Usually the lender will get two appraisals done on the property and enlist a real estate agent to provide a property evaluation. Once this is done it will arrive at a price to advertise the property. This process usually takes a few months.
If you were to put an offer in on a foreclosed property there are a few details to be aware of:
- Unlike the court ordered sale, you can have conditions and take the time to satisfy them. This is just as if buying a single family home from the owner.
- There will be no real property report and/or condo documents available to you. A real property report will cost $800-900 and the condo documents can cost up to $500.
- As with the court ordered sale, the property is sold “as-is-where-is”. Therefore no guarantees are made about the property.
- Unlike the court ordered sale, anytime prior to you taking possession of the property, you could lose it. If the home owner comes back to the bank and makes arrangements for payment of the mortgage, thus restore their integrity, then the contract is null and void.
- You will be either dealing with a representative from the lender or their lawyer. In which case, they only work 8am to 4pm, Monday to Friday. Be sure to get your offer accepted during the week, so no other offers come in over the weekend.
- For foreclosed properties, the lender or lawyer are willing to negotiate and they do have a minimum dollar amount that they can accept.
The ideal buyer for a court ordered sale or a foreclosed property should have the following characteristics:
- You’re patient
- You have a sizeable down payment and don’t need mortgage insurance to support the financing
- You have some trade skills or someone within your investment group that does. This will save you time and labour costs.
- There is no urgency to find a property
- You are not emotionally attached to the process or the property
- You have a budget for renovations and a good idea of the costs involved
- You have time to look at homes last minute
Having a real estate agent who understands what you need and has knowledge of this type of property is important. Although one who can be available to you in a moments notice is a huge asset.
Lastly, be aware of sites advertising foreclosed properties. This is basically a way to get your info. The best site to search is realtor.ca that is supported by the real estate board, not a realtor.
To get property information that is actually a foreclosed property or court ordered property, I and any other realtor, can set up a search for you. One of the 200+ criteria I have available to me is the type of ownership. This information can be set for you to receive it the moment it comes onto the market. Giving you a true advantage to finding that great deal in real estate.
If you need more information on buying a property that is a court ordered sale or foreclosure, please feel free to contact me. You can also find me on my Inner City YYC Facebook Page where I provide info on buying, selling and owning your home. Take care!