What to Know About Buying a Foreclosed Home in Ontario?

When you’re looking to buy a home, you may often come across a home for sale that is under foreclosure. These properties are usually identified by being listed at a significantly lower price than typical market prices, which will often catch potential home buyers’ attention. While some might jump at the chance to get a discount on a home, others may hesitate since they may feel a stigma about purchasing a foreclosed property.

There are both benefits and drawbacks to purchasing a foreclosed home in Ontario. Here is what you need to know.

A cheaper purchase price (probably)

When a property has gone into default, the lender will try to recover as much of the cost as possible. This means they will sell the properties at auction to get the highest price anyone is willing to pay.

This is good news for potential buyers as they can often get a house for a lower cost than others on the market at the time. Remember that the discount may not be as steep as you think since there will likely be competition from other buyers looking to get a deal.

Less than ideal conditions

Foreclosed properties are sold “as is.” When a house is being foreclosed on, the previous owners will have let the condition of the house go. There will often need to be a lot of repairs done on the house and upgrades to make it into the condition the new owners would want to live in.

Additionally, when you buy a foreclosed home, it may not be very clean or well-maintained. Expect to put in some elbow grease if your offer on the property is accepted.

A more complex buying process

 There is quite a bit of red tape to get through when you buy a house that is not being sold as a foreclosure, so, understandably, there will be even more to get through when you buy a house that is.

The transaction period may be much longer than a typical purchase will be, and there may be additional certainties that your lender needs since they will be aware houses in foreclosure can pose additional risks and liabilities. Working with a good real estate lawyer can help you navigate a foreclosure purchase’s complexities.

No warranties or guarantees

 Houses that are purchased in a state of foreclosure will be sold in an as-is condition. This means that the lender you are purchasing it from will be released of all future liability on the property.

If you run into issues as you renovate the house or there are major issues with the foundation, you cannot go back to the lender because you purchased the house as-is.

Not ideal for first time home buyers

 Since there can be many conditions on buying a foreclosed property, it’s usually advised for first-time home buyers to stay away from them. The conditions mean the buyer must be very aware of what they are getting into, and they must do a thorough check.

In many cases, the property can only be viewed at certain times (typically during the day because often there won’t be any power running to the property).

If you are looking into a foreclosed property as a potential purchase, you must understand what you’re getting into and the risks you may face. You should consult an experienced real estate lawyer before making an offer on a foreclosed property.

Contact Levy Zavet today

Are you considering purchasing a foreclosed property in Ontario? We can help you through the process. Contact us today to make an appointment with one of our real estate lawyers.