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However, buying a foreclosure property in BC raises some unique challenges and it's pertinent for every buyer to understand the benefits as well as the risks associated with the process for making an educated choice – after all, it could become one of the major financial investments in your life.
Here’s what you need to know before venturing into the world of foreclosure properties in Vancouver, BC.
- Understand the foreclosure risks and process. The foreclosure process in Canada takes place mainly in 2 ways: power of sale or judicial sale. In the latter, the mortgaged property is sold under the supervision of the court after the lender initiates proceedings against the borrower in a court of law. In the power of sale, the mortgage holder sells the property without any involvement of the Canadian courts, making the process of foreclosure much faster. Let's see the process of sales: a foreclosure property is listed with a Realtor like any other property. When a Realtor receives an offer, it's passed on to the lender’s representative for consideration. What the buyer needs to understand is that even though the negotiation for the deal is taking place between the buyer and the lender, even after the deal is agreed upon, in the case of a judicial sale, the lender will take such offer to the court where others in the courtroom may be given an opportunity to bid before such court finalizes the agreement. Furthermore, all offers on foreclosure properties in BC must include a Schedule that limits the lender’s liability to bringing the offer before the courtroom for consideration - meaning, as you wait, there's a possibility of another offer being accepted by the court on such property. You must also be aware of that foreclosure properties in BC are sold on as is where is basis, and the lender is not responsible for the condition in which you receive the property - even if it is different from what you've seen last. Essentially, it means you accept the property in the exact condition as it stands on the closing date of the sale, without any warranties or representation. Getting insurance for foreclosed properties in BC is another challenge, as most local insurance companies won't provide insurance on a foreclosed property until it's transferred in your name. Tenants can also pose a challenge, because unless they're made party to the foreclosure proceedings, the court cannot ask them to vacate. Furthermore, insurance coverage for foreclosure properties may exclude damage caused by the tenant.
- Location. The location of any property plays a very important role in ascertaining its value. The same principle applies for any foreclosure property in BC, as well. Apart from looking at the historical performance of the local area in terms of capital appreciation, you should also look for family-friendly amenities in the vicinity such as parks, public transportation, and schools, especially if you've got children and/or intend to rent out such property in the near future. Furthermore, look for a safe neighborhood and don’t buy in areas with too many foreclosure properties in the vicinity that might drive down the value of your home. Some upcoming areas to buy a foreclosed property in Vancouver, BC include Coquitlam, Burnaby, and New Westminster.
- Understanding the costs involved. Foreclosure properties often come with a lower price tag that makes them very attractive to buyers. However, unless you're in the business of flipping houses, renovating or simply fixing up the house could stretch substantially your budget. And because such property is bought on as is where is basis without any disclosures, you'll never know what you're getting into unless you have viewed the property at least once and had it surveyed by an expert before placing an offer on it.
- Take expert help. Buying a foreclosure property is quite different from a regular property purchase, and it'll always help to obtain guidance from a local expert to avoid ending up with a lousy deal on your hands. Updating your knowledge through industry reports, latest blogs, and knowledge resources compiled by Canadian experts will help you understand the foreclosure process better. Online and app based listing services not only feature latest foreclosures in the British Columbia province, and all other Canadian provinces, but will also bring you real estate information and knowledge on a regular basis.
