Buying A Foreclosed Property? Here's What You Should Know!
The Power of Sale is executed when a homeowner fails to make his or her mortgage payments and the property goes into foreclosure. In such cases, the lender or the bank of the borrower obtains the power to sell the home so that they can recover the money they have failed to get back. As a buyer of a foreclosed property, there are a lot of misconceptions that you may want to know more about before getting into an agreement to buy such a house.
The final deal
Some people buying a foreclosed property feel that the deal for the property is final. But one must be aware that unless the purchase agreement explicitly specifies, the lender has every right to make the deal null and void if the owner of the said property is able to make the payments of the mortgage which he had defaulted upon, prior to the closure of the deal. The buyers of such property must get in touch with their lawyers before signing a purchase contract of the home, and must try to have a clause that says the deal must be finalized even if the property owner is able to make the previously defaulted payments. This is to protect your own interest and to save yourself from heartache and waste of time at a later stage of property buying.
Time taken for sale
The purchase of a property sold under the Power of Sale does take less time than a conventional home sale but it isn't that fast either. All the paper and legal work needs to be completed before the property is transferred to the new buyer.
Value of property
Some people believe that since the power of sale has been executed, the property is being sold at a lesser than market value. This is clearly not the case as it is not a distress sale. You would have to pay the market value to buy it and the property will be listed on MLS.
For a conventional property buying deal, it is normal for the person purchasing the property to ask the seller or the current homeowner if they need certain repairs to be done in order for them to agree on buying the said property. But for a property that has been foreclosed due to power of sale, the property has to be bought in the condition it currently is in. The buyer can't insist that the seller has to make repairs as it is usually a bank that is selling this property.
If you are in the process of buying a property that is being sold due to the execution of the power of sale and have any doubts or queries, do contact us at LendX Financial in Brampton, Greater Toronto Area.