7 Reasons Buying A Foreclosure In Edmonton Is Not A Good Deal
Edmonton has a really unique marketplace right now, and what I am finding is that foreclosures are just not a good deal. People have this perception in their minds that they will pick up an awesome price on a house that is in foreclosure in Canada.
This is just not the case, and unfortunately some realtors out there are telling their clients that foreclosures are a good deal. This is a tactic to entice the buyer to act fast. If you really want to know if you are getting a good deal, call us before you buy. I will give you free advice on this, no problem as I have made the mistake myself in the past with buying foreclosures.
How do you get a mortgage on a foreclosure in Edmonton?
You will often have to put a large sum down…like 20%. The reason for this, is agents will make comments on the mls listing that the property needs work, or handyman special. The realtor think this is a good advertising tactic, but it really is not as it raises red flags with the banks.
What happens if red flags are raised with the bank when buying a foreclosure?
They will often ask for an appraisal, and depending on the condition of the property they can ask for more down. The insurers like cmhc and genworth can also decline the deal if the condition of the property is not good.
Furthermore when an appraisal happens, the appraiser may appraise the property lower than the value. You really have to make sure the appraiser doing the appraisal knows about foreclosures and values of repair. If you get one of these newbie appraisers they will grossly undervalue the property and the bank will decline or ask you for more down.
Please call me if you are in this situation, I understand the process and I can coach your realtor on what they can do to get this done. I also know the appraisers in the city that are good at this.
7 Reasons buying a foreclosure in Edmonton Is Not a Good deal
Banks in Canada are Rich
The reason I say banks in Canada are rich, is because they can afford to sit on a foreclosure forever if they wanted to. I have personally put offers in on loads of foreclosures and I never end up getting a crazy deal. The reason for this is because the Canadian banks can afford to hold the property and will generally not take less than what they have in mind.
2. Other Peoples Problems
When you buy a foreclosure, you are buying another persons problem. There can be unexpected things that come up. Like for example, I bought one a month ago and when I took possession someone had stolen the furnace. It was crazy because the furnace was there when I bought it. The paperwork they make you sign is really strict, and you cannot go back to them for any reason.
3. Unconditional offers
If you don’t have cash to buy the house with or rock solid financing, then you may not be able to buy the foreclosure in Edmonton. The reason for this is that many foreclosure listing have to be unconditional offer. Meaning you cannot purchase subject to financing or inspection.
You better be really damn sure of the purchase before you buy this way, as you cannot back out for any reason or you could get sued.
4. No Inspections
Most foreclosures do not allow for inspections. The reason for this is because the homeowners that are loosing the house may still be in the property. Often these people will trash the property before they are evicted.
5. Court date frenzy
I have been to court for foreclosures in Edmonton and it is like an auction. You are allowed to up your sealed offer if you choose right before the decision and you also get to hear the other offers. This is craziness, and people tend to get into that auction mentality and keep upping their offers. I went into one a year ago on a severely damaged property. The people that ended up buying it paid way more than they should have.
I calculated what it was worth renovated vs what it would cost to fix and they would loose around 40k.
6. MLS Listed
The foreclosures are all MLS listed, so it is avail on the open market. You cannot get a good deal this way.
7. Realtor Pressure
Realtors like to pressure their clients into buying these properties so that they can make a quick sale. This is not always in the best interest of the buyer.
Should I buy a foreclosure in Edmonton, Canada?
It is not alway a bad idea to buy a foreclosure in Edmonton, you just have to be very careful and do your due diligence. Call me first, even if you have a realtor for some advice. I have done this many times and would be happy to guide you in the right direction, or help you finance your purchase.
Where can I find foreclosure listings in Edmonton?
Every agent will tell you that they can send you foreclosures, but not all can. I can introduce you to an gent that specializes in foreclosures so that you can get all of the right information.
Do you Pay GST on a foreclosure house in Alberta?
There is no get payable on a foreclosure home in Alberta. GST are for new builds.
Sean and Radika Rampersaud are a family team of Edmonton mortgage brokers. They specialize on helping their clients to get the lowest mortgage rates in Canada by leveraging high volume and multiple lenders. “We want to help our clients not only to get the best rates, but also to make the home buying process easier.”