Often, our clients will ask ‘Jim, do you have access to foreclosure and power of sale?”
That’s an understandable request since they are usually promoted as “fire sale” opportunities, where you can buy property well below market value, and who wouldn’t want to do that?
Categorically, it’s very rare that a foreclosure or power of sale property is actually a fire sale, here are the reasons why:
- Big lenders are publicly owned companies and therefore have an absolute obligation to their shareholders to sell any asset at a fair market value. For them not to do this would be a disrespect to their shareholders. The banks in Canada are conservative and watch their pennies, and this means they are going to market that property properly to get a fair price.
- By a bank marketing a power of sale or foreclosure property properly, it demonstrates good faith. This shows that although the person who took out the mortgage was in default, the lender did everything they could do to maximize the sale price because the left overs still go to the owner once the mortgage and fees are all paid off.
When we work with clients in this situation, we are doing the exact same. We want to make sure the price is of fair market value, which is best for both the buyer and the seller. We also market that property the same way we do with any other listing in order to get the right price.
So are the foreclosures and power of sale prices “fire sale”? Not that we can attest to. The better focus for home buyers would be to buy a home that is fair market value and in a great Toronto neighbourhood. For that, we are always here to help you!