The Deal 1: Power Of Sale Homes
I'm often asked to locate Power of Sale homes by clients. I recall many years ago looking at listings and noticing a great looking home price much lower than similar homes. I use to think what an awesome deal and would make the call to the advertised agent. After the agent explained the house "needed some work". I thought how much work could it need? I know family members who are handy...
After visiting the home, assigning a price to all the repairs, tallying up the estimate, it was safe to say, this was not an option.
Homeowners who fall behind on their mortgage payments are notified by their financial institution that they are in default of their mortgage obligation and are then evicted from the home. If a homeowner was unable to make their mortgage payments, chances are they were not able to maintain the home or even keep up with property taxes.
The rock bottom price of a power of sale home rarely exists, the Ontario Mortgage act requires the financial institution to sell the home at fair market value to satisfy the amount of funds owed, and to provide any surplus funds (usually equity) back to the homeowner. Therefore, a buyer can negotiate the price as like any other purchase deal.
It is a buyer beware situation, as there could be restrictions or limitation on how the deal can be done. I've been in situations where an offer to purchase is needed, prior to viewing the home.
The Deal 2: Grow Ops
Unfortunately, this type of property is appearing more often in the market. No neighbourhood is above the possibility of having one within it. The home is often has an attractive price point appointed to it. It almost seems too good to be true.
For a property to be labelled a "Grow House", the property was possibly converted in some form to produce illegal substances. Often the home is altered by holes being cut in floors, roofs, ceilings, etc. Patching up the holes would be a simple remedy, but often the air quality has been compromised, due to the humidity, mould and chemicals.
However, it is possible for the home to be repaired and brought up to code. This is great, if you want to purchase the home. You get a home at a great price and the problems are no longer an issue, sounds like a deal...SOLD!
Then the concern weighs in when you decide that you want (or need) to move. When placing the property up for sale, the fact the home was a "Grow Home", needs to be disclosed. This disclosure will have a negative impact on the value of the property and may be perceived as a potential risk.
This type of property can be a deal for someone looking for their dream home and who does not plan on moving.
There are many deals on the market, but you first have to determine if you can handle the risk, if you have the resources and time to make the home liveable to your standards.
One person's success in real estate, may not be the same for you. It's best to identify your own personal goal and work to make it happen.