Hi, its Richard Pearce and I would like to talk to you about Foreclosure sales. A lot of people get confused between a foreclosure sale and a bank power of sale. I think the reason for this is that foreclosure sales are very common in the States. Its a very common term. Everyone understands that is when the bank takes the house from you and you're not paying your martgage. But in this case, in the Ottawa area, its far more common to see a power of sale action.
The reason for this is that foreclosure has to be done through the courts and it takes a long time - up to a year I've heard to get that done. Now the banks would prefer to use foreclosure because they then take the property from the defaulting home owner lock, stock, and barrel. They take title, they can sell it for 20 cents on the dollar if they want, For whatever is owing on the mortgage if they want. Unfortunately for the banks and fortunately for homeowners here in Ottawa that is a very lengthy process and not easy to do. So the banks here will use the power of sale provision on your mortgage to take the property back when you stop paying that mortgage.
Under that action they do seize the property, they do kick you out, they do sell the property, but they cannot sell it for whatever they want. They have to sell it as close to market value as they can. That means going out and getting a couple of independent appraisals, making sure it is listed through a realtor for an appropriate price, and holding out for a decent market value offer.
Its not as nice as foreclosure, but you do get properties selling for less than others in the same neighbourhood. They may be in poor condition though as that is a characteristic of any bank repossession. If you are buying it as-is where it is then that means you probably don't get appliances, light bulbs and showerheads and the previous owner may have punched a few holes in the walls on the way out the door and no flowers in the vase when you come in. So you have to be handy and overlook the condition the house is in to take advantage of one of these sales.