Buying a Foreclosure
When a homeowner is unable to continue paying their mortgage, their home is claimed by their lending institution through a foreclosure process. This presents opportunities for buyers looking for discounted properties, though it comes with certain caveats. The bank will hire a law firm to deal with the foreclosure, and the lawyer will hire a REALTOR® on behalf of the bank. The lawyer then works with the REALTOR® to decide an appropriate list price, and like any listing, the foreclosure is posted to the MLS®.
Any Buyer that puts in an offer can include subjects in the contract, however, it cannot have the seller promising anything. It is sold AS IS, WHERE IS. Even if the Buyer saw appliances on the viewing date, there is no guarantee those items will be there on possession date. The condition of the property will be as is on possession date, not as viewed.
Once the subjects on the contract are removed, the deal becomes firm subject to court approval. The court will set a date for anyone else to "bid" on the property. On the day of the court sale, any offers submitted must be subject-free with a deposit. The highest bidder will get the home, and the first buyer can bid again in court. When bidding at court, there can be no changes or corrections to the contract. It is a one-shot deal, with no back and forth on price.
In working with a Buyer's agent, the contract must contain a few key points:
- The Contract of Purchase and Sale will be subject to court approval.
- It cannot warrant the Seller to do anything.
- The Buyer's name on the contract must be 100% correct, and cannot be changed, and an additional Buyer cannot be added after court approval.
- The deposit must be 5% of the purchase price or greater.
- Schedule A must form part of the contract, which is typically attached to the MLS® listing and contains specific details as per the bank.
- It excludes all chattels and non-fixtures.
Foreclosure proceedings are posted on the Government of British Columbia's website. You can visit https://justice.gov.bc.ca/cso/courtLists.do to view the daily court list.
If you would like a list of foreclosures, please feel free to contact me.