Buyers have many reasons for purchasing a foreclosure. The one we hear most is usually that the price is more affordable (although this is not always the case; we’ll get into that later).
The process of buying a foreclosure is substantially different than that of buying a regular listing, but it helps to know what you’ll be facing before you dive in. Here are the steps you can expect to take when you’re going through the motions of successfully buying a foreclosure.
The Foreclosure Process
- The buyer makes an offer on the home, which is allowed to have conditions (such as a building inspection). This offer is always subject to court approval.
- The offer is accepted and the buyer has their subjects removed (if applicable).
- A court date is set with approximately three to four weeks’ notice, and other potential buyers are notified of the date.
- On the day the sale goes to court, other buyers can attend the hearing and make an offer on the property. If the additional offer is a “significant amount” (as determined by the judge) above the original offer, the purchase will go into a competing bid scenario. The amounts of the original offer and the higher offer are disclosed to the additional buyers who may offer their bids.
- All potential buyers now submit their best offer, including the original buyer. No buyers will know the value of any bids but their own from this point onward.
- The court considers all offers and accepts the best one, giving additional weight to the original buyer’s bid, as it was their expenses and efforts that brought the purchase to court.
Is Buying a Foreclosure More Affordable?
Buying a foreclosure is not always the most affordable option. In some cases, if the home has been for sale for a long time, it will likely have been reduced several times making for a very attractive price. However, it can be disappointing if a buyer gets to court, has many other competing bids on the property, and ends up losing the property to another buyer who is willing to pay substantially more, making it not such a great deal anymore. The time it takes to wait for the court date, attend court, and go through the various motions can also end up not being worth the price cut.
Ultimately, the choice is the buyer’s. It all depends on your comfort level in real estate, the amount of emotion you’d like to invest, as well the time you have available for the transaction process, taking into consideration the fact that you might not get the home you want the first time around, or even the second. We have a lot of experience whether you’re selling or buying a foreclosure, so we’re great for bouncing ideas off of, if we do say so ourselves! If you’ve been thinking about purchasing a foreclosure, contact Nanaimo’s Real Estate experts at the Charlie Park Team.
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