In my last post, I talked about how hot the Vancouver real estate market is right now. But the downside of skyrocketing Vancouver home prices is they can price people out the of the market.
So today I want to talk to two types of real estate buyers.
Homebuyers who want to find GREAT deals in Vancouver and real estate investors who want to find deals that offer a good return on investment.
If you fit in either category or both keep reading.
What Exactly Is a Foreclosure
Put simply, banks take back ownership of a house if the buyers can’t or don’t pay their mortgage as agreed. So instead of buying from an individual, you are buying the home from a bank.
The bank is not in the home selling business — but the lending business — and usually just wants to sell the house for enough to cover the loan on the home.
What You Need to Know About Buying Vancouver Foreclosures or Bank Owned Houses
- Banks don’t advertise foreclosed homes as bank owned.
- Usually, only real estate professionals can tell you if a Vancouver home is bank owned.
- You can’t access these listings without a realtor setting up a customized search for you. (The public can’t easily access the listings.)
- You have to go through a special process to buy foreclosed homes, which involves appearing in court.
If you’re interested in working with one of our Foreclosure experts follow this link.
How the Process of Buying a Foreclosure Works
After you locate a foreclosure you want to buy, you submit an offer to the bank (owner). That’s why you need a real estate agent who understands foreclosures and how to deal with banks. You want someone who can negotiate a great deal on your behalf.
Once the bank accepts your offer, you get a home inspection, apply for a mortgage and everything else you typically do when buying a home or investment property.
Getting a Firm Deal
Once you take these steps and determine you still want to buy the property, you put down a deposit. At that point, the deal becomes FIRM.
The bank requests a court date for the approval of the sale, as soon as the deal is made firm. You typically have to wait 2 to 4 weeks to go to court.
Firm Doesn’t Mean Guaranteed
But it is not a done deal yet. You can’t just show up on the court date and buy the property. The bank will still let other buyers view the property and know what price you’ve offered to pay.
Going to Court
If no other buyers show up on the day of court, you can buy the property for your original offer. But, if other buyers come, you will have to beat their offers – and you only get one chance to do it.
The judge accepts SEALED bids from all parties and everyone must have financing, home inspections, etc. completed by the court date.
Approving the Sale
The judge reviews the sealed bids. He makes his decision based on three things –- price, completion date and the deposit. Once he decides who has the best offer he approves the sale for that buyer.
(A Quick Note: Due to the uncertainty of this process we usually don’t recommend that you buy a foreclosure as a primary residence. Of course, if you understand how the process works and have the flexibility to go through the process a few times, you may be an exception.)