I've posted 4 blogs over the last several days where I was not rewarded the customary 225 points, (900 points) so I am going to post this last one again and see what happens..
YOU CAN GET A GOOD DEAL ON A POWER OF SALE
TRUTH OR MYTH?
Many consumers believe that when a home is listed under Power of Sale, there is a deal to be had...This is a misconception many people have and there are risks to purchasing a home being sold under Power of Sale.
First, the Bank or Financial Institution must sell the property at fair market value, or risk being sued by the previous owner for selling at a lower amount. The Bank must get at least the outstanding amount owing on the property, plus sufficient funds to pay the commission, and any surplus is paid to the previous owner.
Once the Bank has taken possession of the property, after default by the owner, the Bank takes full control of the property and usually lists with a Realtor on MLS to get the proeprty sold. They typically require all offers to be faxed, and ask for 48-72 hours for irrevocable time, and only review/accept offers during business hours.
There also some pitfalls associated with buying a power of sale property.
- there are no warranties associated with the property, or its conditon
- there are no warrantaies associated with any appliances, if any are left behind
- there are no warranties of ownership of any chattels on the property
- there are no warranties of any contaminants or hazardous material that may be present. Typically, the lender does not allow for any inspection conditions in the offer… If you want an inspection you must conduct that prior to submitting an offer and depending on the findings, decide if you want to proceed.
- The previous owner has up to the 11th hour, even if a firm offer has been accepted, to bring his mortgage payments current and take back possession of the property.
- The Bank usually includes many schedules and it would be prudent to have your lawyer review these prior to signing.
Getting a “good deal” isn’t always the case with Power of Sale properties, as there is some risk level associated with these properties, and you could end up having your contract negated if the owner brings his mortgage payments up to date before the property changes ownership.
You should ensure you get all the information associated with Power of Sales purchaes from your real estate agent or lawyer relative to the laws in your area before signing on the dotted line!
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