The lure of scoring a ‘steal of a deal’ on a property for sale by foreclosure isn’t impossible, but in a hot market like this one, it’s becoming pretty rare.
When markets are hot, equity in real estate goes up and even those guilty of spending beyond their means can get out of a financial hole by selling their house, said real estate agent Rick Couvelier.
Greater Victoria real estate especially has grown and the added equity creates leverage, be it to acquire a line of credit or to create cash through the outright sale of the house, said Couvelier, who’s been in the real estate and housing industry for 40 years.
And yet, despite the rising economy and dip in mortgage defaults (and other reasons for foreclosures) there is always an interest in the topic of foreclosures, he added.
“Some people who are seeking opportunities might think they want to find foreclosures,” Couvelier said. “But I find there is quite often an even better deal on the market. Everybody assumes they’re getting a steal of a deal, and the odd time they end up like that, but it’s not always the case.
“There’s been times I’ve been to court and the [foreclosure] property has sold for a lot more than I thought it would be worth.”
Couvelier held a recent seminar explaining the foreclosure market.
People will always be interested in the opportunity of purchasing a home through foreclosure, he said, but there’s a lot to it. In particular, buyers can get frustrated once they reach the court process.
One of the issues buyers need to be aware of is that once a foreclosure sale reaches court it’s a ‘black and white’ process. Yet buyers are rarely prepared for what the court master wants.
“The court will want to see that the property was fairly marketed and priced, so that the market wasn’t taking advantage of the debtor,” Couvelier said.
In Couvelier’s experience, there’s other opportunities in the market that are even better than foreclosures.
“In 40 years, it’s rare to see people looking solely for foreclosure properties.”
One of the drawbacks is that the condition of the property may not be the same when the buyer takes hold it as when they saw it.
Appliances and fixtures that are presumed in a regular purchase of a house, such as the fridge, range, washer and dryer, are legally considered chattels and unless they’re in the agreement, they quite often are missing when the buyer takes the keys.
“[Creditors] are not foreclosing on the chattels, and those may be removed,” Couvelier said.
A new set of appliances can add up to a considerable cost. There’s also the matter of damage. Consider the state of mind the debtor who’s selling the property might be in.
However, foreclosures do occur, and they can be hunted down. They range from multi-million properties right down to condos and manufactured homes.
“At the moment you can buy a two-bedroom manufactured home for $59,000 in Sooke, or in Craigflower-Admiral for $85,000,” Couvelier said, adding condos start at $115,000 in the Greater Victoria region for a one-bedroom.
“Usually people are looking for what they want. They may find a house that has the balance of everything but realized it needs work and its a foreclosure property.”
In that case, it’s a different process that kicks in.
Couvelier is hosting another seminar on April 22, How To Win In This Hot Market, for buyers who’re missing out and could improve their chances if they understood what it takes.
The seminar is about four hours long and is an instructional to help buyers understand this market, including how to bid when you know you’re one of 10 buyers, and how to navigate the conditional appendages.
The upcoming seminar will happen at UVIc. To register call 250-477-0921 or online at couvelier.com.