Blog by Jakob Christoph

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COMOX VALLEY FORECLOSURES - What to Expect in the Offer Process


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I have a lot of clients that ask me to find them a Foreclosure to buy, which they believe (and are sometimes correct) will be listed below market value and therefore be a "steal". Here are some things you should know before you seek out and pursue that bank sale:

A foreclosure (“court ordered sale”) is different from a regular home purchase. It starts off like the others, writing up an offer with your regular conditions (Inspection, financing, etc), but after all of those are satisfied there is 1 last condition – “Subject to court approval”. While the other conditions have deadlines (“on or before May 30, 2014”), the Court Approval will not occur until there is a time slot available for a judge to read the offer. This can be a couple weeks or a couple months.

Once you have lifted your “normal” subjects, we wait for a court date. During which time the listing agent will do their best to encourage other Realtors/Buyers to plan to beat your offer in court, working in the best interest of his Seller. Your subject-free offer is public information at this point - including your accepted price. For this reason, you may need to “up your offer” on the court date if other offers are presented to the Judge. They will most likely be signed, sealed, and delivered to the judge at the same time. He selects what, in his opinion, is the best offer and that Buyer “wins”. If you lose your offer, as the original buyer, your deposit is returned to you. If you are a buyer that comes to Court with the intention to beat the current offer, you MUST already have a deposit in place and a subject free offer. This means you will have to have already conducted your inspections and secured your financing, etc. If you lose, you will also have your deposit released back to you.

Other important factors to know: these properties are sold as is/where is – there are no warranties (that includes Appliances). There are also no disclosure statements as the legal team representing the bank or insurance company have never occupied the premises and therefor can make no representations of the home’s condition and history (this also adds the danger of the home previously having been a Grow-Op/sensational death scene, which could be bad news for you if it comes out later you own a stigmatized property). There is also no guarantee that the home will be in the same condition as when you saw it the day that you decided to buy it (as is… where is), so if vandals or thieves (or an angry ex-owner) left a mark prior to closing, you would be taking the house as is.

I hope this helps! All this said, there are some great opportunities out there. You should also know, as per strict requests from Banks and Mortgage Insurance companies, there is no way a realtor can seek out "Foreclosure" on our MLS search tool. They, fairly, don't want it public knowledge or easy to find a list of said foreclosures, as that can hurt their price as the public assumes they can hammer the price. The Mortgage companies need to get as much as they can out of this failed investment.

- Jasmen