RE/MAX Vernon
5603 27th Street
Vernon, BC
V1T 8Z5 CA
Greg Kalyniuk
Office:(250) 549-4161
Direct:(250) 503-3758
Toll Free:(800) 667-2040

Foreclosures - The Mystery Revealed

Foreclosures - the mystery revealed

It is an unfortunate fact that even in the Vernon area there are people who have lost the right to keep their homes. They can’t pay the mortgage and the mortgage holder has been given the right by the courts to sell the home. Once the home is sold the mortgage holder(s) takes their portion, the Real Estate agents get their commission and after all of the other expenses the owner gets what is left, if any.

In the North Okanagan there are presently 71 court ordered sales which include everything from building lots to high end homes in great subdivisions. This is the most court ordered sales we have seen in many, many years and some believe that this is not the end of them.

Is a court ordered sale a good deal? It is generally a good deal, however, it is not a steal in most cases and here is why. The court protects the rights of the original owner to get “fair market value” for their home and the system is set up that way.

The first step in this lengthy process is the mortgage holder asks their Realtor to determine a fair market value for the home. This is done in the usual way with recent comparable homes used to get a starting price. It is then put on the market and the MLS system to see if buyers want it at that price. If it doesn’t sell right away and there are other comparable homes that have sold for less, then the price is reduced.

The second step is when a buyer comes along and puts in an offer that is accepted by the mortgage holder. This is done in the usual manner with an offer, subject clauses that protect the buyer, and finally after subjects have been removed, a firm and binding offer subject to court approval. The basic details of the accepted offer such as price and deposit are made public knowledge at that time. Then the fun begins!

The third step is that a court date is set after the original offer is accepted. It is on a Tuesday morning in Vernon and could be up to 8 weeks after the first offer is accepted. At the court date other buyers may show up and present a sealed bid to the court for consideration. At the discretion of the judge the first accepted offer may be given an opportunity to present another sealed offer to the court at that time. The judge then opens all of the bids and selects the one that is the best one for the property owner. The judge looks for the highest price and the shortest completion time to determine the winning bid. In some cases, the winning bid is higher than the list price because of the number of buyers bidding to win the home.

Court ordered sales have some restrictions for buyers. For example, all court ordered sales are sold  “as is, where is”. This means that buyers do not have the protection of a home inspection, or a property disclosure statement.  The original Buyer cannot ask the Seller (The Bank) to help with any needed home repairs.

If you are thinking of showing up with your Realtor to try and take the home at the court date, you must be prepared. Your offer has to be “condition free” with all mortgage requirements met, or you have to have cash in the bank. Your offer should be more than the original offer and you have to include a substantial deposit cheque.

While there are many hurdles to a bank foreclosure sale there is the potential to buy a home at under market value. Depending on the property you may even be the only one interested in which case you win! However, there are less protections for a Buyer, especially when it comes to disclosure of the homes condition. Perhaps the biggest disappointment to offering on a foreclosure is that someone else could come along and in a hearbeat take the home after all of your hard work.

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