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Sheila Banser
Phone: 902.830.8757
Fax:     902.455.6738
E-mail: sheilabanser@royallepage.ca

General Real Estate Articles

Foreclosures

Looking to Invest with Higher Risk?

One of the avenues of Real Estate Investing that we are often asked about these days is the purchase of Foreclosure Properties for either Rental Purposes, or to renovate and Flip for a profit.  However, this process can be very risky, time consuming and labour intensive!  Ultimately though, with some careful research, and a bit of good fortune, there is definitely money to be made by purchasing properties that have been foreclosed upon.

What are Foreclosed Properties?

Foreclosure Properties are properties that have been seized by the bank due to the owners having failed to make mortgage payments on the property.  The bank will seize these properties through the use of a property management company, and then will look to liquidate the property via a foreclosure auction, or by simply listing the property for sale.  Often, the properties can sell for a discounted rate, as the bank will be looking to liquidate the property simply to recoup the amount that is outstanding on the mortgage, regardless of the true market value of the property. 

How do the Auctions Work?

The Foreclosure auctions are held periodically at the court house, here in Halifax, on Lower Water Street.  They are conducted by the Sheriff’s office, and are quite strictly regimented and organized.  The property auction must be advertised in the local media at least three times before the auction can happen (typically in the Chronicle Herald here in Nova Scotia), and then it can go to the auction blocks.  There is a minimum bid, which is usually under 10,000 dollars, simply to recoup the sheriff’s fees.  From that minimum bid, all are free to bid on a property, and it is simply an open outcry auction, similar to an art auction, antique auction or any other kind you think of.  In almost every case, the bank will be there to bid on the property, in efforts to drive the price up to the point at which they are recovering all they need for the mortgage, or so as to reclaim the property and attempt to market it via a typical listing on MLS.

What are the Risks Involved?

At time of purchase, there is a 10% deposit required, with the balance being due within 20 days of the auction.  However, one of the greatest risks to that deposit is that you are typically not able to see the inside of the home until after you have taken the sheriff’s deed - post-auction.  Therefore, you are typically buying the home site Unseen, and that brings with it a great deal of risk.  There are also the typical risks that come with purchasing a property for resale purposes, including market risks, increasing renovation costs, and more.  Investing in Foreclosure properties is certainly not for the faint of heart!

Want to know more about investing in Foreclosure Properties?  Interested in knowing when the next auction is? Contact Sheila at sheilabanser@royallepage.ca for a consultation session on how to get started with investing in Foreclosure and Distressed properties!

Risk and reward is the name of the foreclosure game!

This process can be very risky, time consuming and labour intensive! Ultimately though, with some careful research, and a bit of good ortune, there is definitely money to be made by purchasing properties that have been foreclosed upon.

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