What is a Foreclosure?
When a homeowner falls behind on mortgage payments (often 3 months) and does not have the ability in the foreseeable future to catch up, the banks take control and foreclose on the property. Once the lender has started the foreclosure process it is rarely ever reversed. Mounting legal fees, late interest charges and accumulating debt make it near impossible for a homeowner to keep their property. Homes that have gone into foreclosure are often listed at lower prices and are on the market quickly so banks can recoup monies lost. Other important facts to know about foreclosures properties:
- Banks offer no guarantee or warranty on the property
- You buy the home As-Is
- A home inspection is highly advised
- Offers on foreclosures can be left open for as little as 24-72 hours or as long as 5 business days
Court and judicial sales of properties that have gone into foreclosure simply means that a judge from the Court of Queen's Bench in Alberta will decide on which fair offer to accept regarding foreclosed properties. A real estate agent will take an offer on a court sale to a lawyer who then presents it to a judge. There are a few key points to remember with court sales.
- The process can take up to 30 days to be completed
- Homebuyers are required to submit unconditional offers
- There can be multiple offers that a judge is taking into consideration on a single property
- The “buying as-is” policy applies
Grow-Op homes are residential properties that have been used to grow marijuana, commonly in basements. When discovered by authorities these homes are seized and foreclosed by the provincial government. Grow-op homes can be a gem for homebuyers and property investors. These homes are often sold below market value at a reduced price and do not stay listed for long. Important notes you need to know about grow-op homes are:
- You cannot get a mortgage on a busted grow-op home (has to be purchased in full)
- Buying the home is done under the condition that the homeowner has the property remediated
- The home must pass all health inspections set in place Alberta Health Services before it can be lived in or resold
- All costs to get the home up to AHS standards are paid by the homeowner
Motivated Sellers and Networking
It is not just court-sales, foreclosures and grow-op homes where you will get deals. Motivated sellers are often where the best deals are made, if you can find them. Motivated sellers often have to list their homes due to an employment change, because of a job relocation or for financial reasons, just to name a few. Established real estate agents with strong networks can locate these listings very fast and have you viewing them just as fast. There are other great investment properties that get listed and fly under the radar, everything from handy-man specials to estate sales to homeowners that need to sell quickly. An experienced real estate agent is a great resource that can spot a deal far in advance.