The year 2007 in Toronto was a crazy year in terms of real estate sale and skyrocketing prices. Many buyers bought during this frenzy and paid top dollar for a property. As reality sets in and property values start to decline, these home owners are now struggling to pay off their financial obligations, forcing the bank to take over the mortgage on their home. Because of this, home buyers and investors see it as a great time to buy real estate in Toronto. With low interest rates and with homes being sold under power of sales, it may seem like a good deal, however you may want to look at the hidden details before moving ahead.
When people hear the term power of sale, they automatically think of bargain. Yes, in some cases there are bargains to be found but the mortgagee is looking to recover what is owed to them and also has a duty and obligation to the owner to get the best possible price for the property. If the owner believes the mortgagee sold the property too quickly, sold it under market value, or did not market the property to its full potential – the owner can take recourse against the mortgagee.
Another thing to consider with a power of sale is the fact that the mortgagor has the right to redeem the property up to the time all conditions have been fulfilled or waived. If the property has sold conditional but the seller is then able to pay for the mortgage, the agreement of purchase and sale with the buyer then becomes null and void as long as all conditions set out in the agreement have not yet been either fulfilled or waived. The buyers deposit is refunded but without interest, unless otherwise stated.
Power of sales are sold in “as is” condition. There is a good chance that a home owner who is unable to pay their mortgage also does not have the financial capacity to have maintained the property. There is no guarantee that light fixtures, appliances or any other items will be in good working order or that they are even included in the purchase price at all.
While power of sales can be a “bargain”, there are other things factors to take into consideration as well. The market value, the uncertainty of the buyers redeeming the property and the condition of the property should all be accounted for. Remember, with power of sales, you get what you see.
If you are interested in receiving a list of Toronto homes or Toronto condos being sold under power of sale please contact Joy Paterson, Broker.