blog buy sell 5

Power of sale – big savings?

For some lucky people, a foreclosure or power of sale may sometimes be a fortuitous opportunity.

But not every time.

In a situation where a bank or mortgage holder has foreclosed on the original mortgagee, there is a different world to deal with and negotiate. It can be quite distinct from a conventional sale of property and may be better handled by a real estate team that has experience. Who would be considered team members in good standing? First, a professional real estate agent and second, a lawyer specializing in real estate. It would also be of considerable benefit to the purchaser of this type of buying opportunity if the team had previous experience during a market downturn – especially a recession.

While the asking purchase price may have immediate appeal that may be the first sign of something being too good to be true.

Onus is placed on a lawyer acting for the purchaser in a power of sale transaction because the other party to the sale is not an owner willing to sell but a bank or other mortgage lender that may know nothing about the property – other than its appraised value. So even with a recommended home inspection and a report filled with negatives, the seller may have no interest in rectifying them. In other words, the buyer’s dream price may begin to vapourize when reality – and repair bills kick in.

In addition, a good team will have made provision for an out clause. In short, if the previous mortgage holder is somehow able to come up with all the funds necessary to reclaim ownership then the buyer is protected. Who wants to make a deal, sell another home and show up at the new place just moments before closing to find that the original mortgage holder’s ‘lottery win’ has placed you in an untenable and expensive position?

And the power of sale does not give lenders any right to sell any of the contents of a house, including such items as curtains, light fixtures, fridge and stove which may conceivably be claimed by the original owner.

Legal nightmares equals buyers beware!

A professional resource like Mary Bateman can be a solution. Call 705-722-7100.

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