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Old 01-21-2011, 12:57 AM   #1
Travis Munroe
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Default Buying a Foreclosure vs Non Foreclosure

Buying a foreclosure is very similar to any other purchase. I will outline the differences below for those who would like to know...

- "no warranty or representation": The purchase of a property through the homeowner protects you against hidden defects. These defects must be made aware to the buyer by the seller. With a foreclosure, the bank has no idea of any defects thus they are selling interest in the property only.
For example: There is a large hole in the wall currently being covered by a mirror. Chances are the bank has never been to the property so it is up to the buyer to discover such a defect.

- Appliances: The bank is selling interest in the real estate only. They will not accept an offer with chattels included. Once again, this is the bank protecting themselve. They have no idea if anything is rented or owned when it comes to anything other than the real estate itself. Buyers can be scared as the bank will cross out anything you add as included in the deal. I have done several foreclosure and never had a bank remove anything from the property. After all, they are not in the industry to sell appliances privatly.

- Real Property Report: The homeowner would have had the RPR for the property. I have run into cases where the bank will have it however they do not give it to the buyer. A RPR is only applicable to real estate where you will own raw land. If you purchase a property and later find out that the fence is encroaching on your neighbors yard then you will be responsible to have this fixed. Consult a real estate lawyer about title insurance and ways to protect yourself.

- Condo Documents: This only applies for condo's. A condition commonly added to the purchase of a condo is the review of the documents. These documents are to be supplied by the seller. Once again, the bank will not have these. I typically browse for other units in the same conplex that recently sold and gather as many documents as I can at a fraction of the cost. Any additional documents that may be missing can be purchased online or through the property management company. A fair budget for condo documents is between 2-600 for a full package.

- Court of Queens Bench: Some foreclosures have reached the court of queens bench. These can sometimes be the best deals however the court does not like to see conditions. It can be several weeks before they get back to you with a yes or a no. I suggest to my clients that we get the condo documents (if applicable) in advance and review them. I also suggest to have the financing in order prior to submitting the offer. This way there is no time for the court to come back and say no to the offer while another offer was just submit.

- Schedule A: This is an additional document the bank requires to be signed. It basically re iterates everything that I mentioned above and just allows the bank to confirm that you (the buyer) are aware of the differences.


Some banks are crossing too much out on the purchase contract which is designed to protect the buyer. While I do not know the specifics, this happened in Edmonton and the Real Estate board refused to list any of the properties on the market until they loosened up on there "editing" of the purchase contract. I would not be surprised to see something similar happen in Calgary at some point.


If you have any further questions about or wish to receive a list of foreclosures then please contact me. I would be happy to get out and show you some great deals.

Travis Munroe
Discover Real Estate
403 971 4300
www.tmunroe.com
t.munroe@shaw.ca


** The information above is to the best of my knowledge. While I am an informed Realtor licensed in Calgary I will not be held responsible for anything that I post on this forum.
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Old 01-21-2011, 08:00 AM   #2
WilsonFourTwo
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Great write-up Travis. Really appreciate it!
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