Over the last few months especially, I’ve spoken to a larger number of people looking to take advantage of a great deal. The upswing in our market and the lack of rental units has encouraged many buyers to look at home ownership and investors are out looking for properties for their investment portfolios. I want to get the best price possible for my clients, but some of the ‘deals’ out there are turning out to be quite the opposite.
Foreclosures: Foreclosures in Calgary are generally not aggressively reduced in price from traditional market value. In fact, many are at or slightly below market value. As foreclosures properties are sold by banks, there is often no property history or transferred knowledge about the property and no Real Property Report (RPR) provided. A RPR is a vital document as it outlines the legal boundaries of a property and structures and should include a City of Compliance stamp which indicates that the structures conform with city bylaws. The lack of an RPR may mean that fence at the back is actually feet into another property and your yard in fact is that much smaller. The addition on the back may be developed in the wrong area over utility lines and may need to be taken down or deck completed outside of required boundaries and require a city relaxation Without an RPR, the risk of each individual property needs to be evaluated and you can determine your risk and price you are willing to pay. Foreclosures are often sold as-is/where is so you accept the property as it stands on Possession Day.
Judicial listings: Judicial listings or court ordered sales are similar to foreclosures in many ways with the exception that the previous owner or their tenants/occupants may still reside at the property or have access to it. They may also have the option to redeem on their debts prior to property transfer so not a good option for those without a plan B in that case. As part of purchase, the bank will require you to buy the property as is/where is on possession day so you have no control over what happens to your new home between the day you agree to purchase and the day you receive access to keys. Some people can get angry and remove all fixtures, appliances or damage the property. It is a worse case scenario, but the price should reflect the risk. The other fact many don’t know is that with judicial listings your offer forms part of the public record.
Many buyers may not understand the risks and rewards of reviewing these types of properties and therefore the appropriate value to consider. If you are considering such properties, do your research and work with folks that understand the process. With the right research, you may find just the right property.