Buying a Foreclosure: An Inside Guide

There is property in Calgary that a lot of people know about but are not sure how to benefit from it. Even a lot of real estate agents do not know the ins and outs of foreclosure properties. Yes, foreclosures. Everyone talks about them but few have the knowledge or experience to buy them wisely. We will give you the inside tip on foreclosures. After listing many and buying many more foreclosures we have acquired a good amount of information. Let’s get to the good stuff and see how you can get a great deal on a foreclosure.

First thing to mention is that there are 2 types of foreclosures. There are lender foreclosures and government ones. Let us go through both. Lender foreclosures are good for people that want to get a bit of a deal but also want conditions in their offer. When you write an offer on this type of foreclosure you can write in an inspection condition or financing condition. Also you will usually get an answer back from the lender in a couple days.

When the lender cannot sell the foreclosed property it usually gets picked up by CMHC, the government corporation. This type of foreclosure is a much better deal;, you can get homes very inexpensively. Of course there are downsides to the potential great deal. First you usually cannot write conditions on a CMHC foreclosure. So no financing or inspection condition. This is a bidding process. The Realtor® listing the property will take all the offers and give them to the lawyer who then presents them to a judge. The judge picks the best one. This can take 2-3 weeks. So it is a slow process.

What can you do to get the best deal and protect yourself. There are a few things. First you ask your Realtor® to only find CMHC property (government foreclosures). These will get you the best deal. Then you look at the property twice. Once to look. The second time is when you know you want to make an offer and you bring an inspector or just look it over yourself. At this time you take pictures of all the defects and issues. You will write a quick cover letter with your offer and the pictures attached. This will show the judge why you are offering so little for the home. Be honest on the cover letter but make sure you point out a lot of problems and maybe even the costs to fix. This will justify your offer.

Even though most foreclosed properties are beat up and neglected they can be a great way to save a lot of money on a home.. If you are unsure of how much things cost bring a contractor with you to the second viewing of the home. Get them to whip up a quick quote for you. That will give you a good insight into how much you will need to renovate the property.

One final thing. If you put an offer on a foreclosure, make sure your financing is 100%. Double check and make sure you are pre-qualified for that amount. Especially if it is a government foreclosure without conditions. You do not want to get the house but then cannot get financing. You will lose your deposit.

So to sum up. If you want the best deal, look for government foreclosures. See it twice. Get a quote for work. Take pictures of the defects. Write a cover letter and attach the pictures. Mention the issues and how much it will cost to fix. Make sure your financing is 100%, if you need it, and give it a try. You might get the best deal of your life.