This past week I was in court for a Foreclosure sale of a townhouse in Mount Pleasant. Yes, I know what you are thinking, why would anyone get foreclosed on in this market? It’s definitely not the norm and it’s quite rare but they still do happen. Typically when we think of foreclosures we think of distressed markets in America… More specifically Arizona, Florida and Las Vegas. So how does this happen in Vancouver? Well from time to time unfortunate incidences happen to those in this lovely city of Vancouver as well. It could be a job loss, divorce or any type of unfortunate events that lead someone to be behind on payments.
Because the Vancouver housing market is so hot right now most people that get behind on payments decide to sell before the banks repossess the home. When home owners that fall behind on payments don’t decide to sell is when foreclosures can happen. Since January 1st, 2016 until today there have only been 11 foreclosures in East Vancouver… and one happened to have been the one that I was involved with last week.
How does the process work?
Typically once an owner has been foreclosed on the home gets listed by an agent and the ownership is now under the bank. Usually there are only a few showings as these can be challenging. Once there is an accepted offer, the offer price is made public and a court date is set. At court any other buyers may show up with their own offer in a sealed envelope. These envelopes are collected and presented to the judge, or Master. The Master looks over each offer and declares the winner (highest bidder) in front of the court. If there are no competing bids generally the original offer is accepted.
Is Buying a Foreclosure Risky?
Buying a foreclosure is definitely more risky than purchasing a normal home. You are purchasing “as is, where is“. “As is, Where is” means that the seller is making no promises about the condition of the home and is assuming no responsibility for any damages or issues with the home once the new buyer moves in. The buyer is also assuming some risk that the seller may or may not voluntarily leave their home and bailiffs may be needed. Essentially you are buying a home with no warranties as to how the home will look upon your possession date.
Why Buy a Foreclosure
If there is more risk with buying a foreclosure why would any buyer go down that road? Well simply put, it can be a chance at getting a deal in this market. My clients decided to go in on this as they wanted a fixer upper and were not as worried about how the unit looked always. Often agents and buyers stay away from these properties as they are unsure what they mean or how to go about it. This can lead to less competitiveness in the sale and therefore resulting in a lower sale price.
Thankfully our market does not see a lot of foreclosures. They are generally signs of poor economies or high unemployment, but not always as is the case in Vancouver. With such a small number coming out each year it is common for new agents to not understand the process. It is important to have a Realtor who has been through the process and understands how it works. We can set up our buyers looking for properties like this with a search to receive only foreclosures or we can help our buyers understand the risks and potential rewards with such purchases.
If you have any questions about foreclosures in this marketplace please do not hesitate to give us a call.