i am a newbie from Toronto, Ontario, Canada. since the real estate investor site are so incompetent over there, i am seeking help here.
anyways, yesterday a realtor sent me several listings, power sale by banks, and another one is because the owner is deceased, relatives are selling.
in canada, the banks have to try to sell at FMV, however according to the real estate agent, the price listed are below FMV. there are only 1 picture for each property, and they seem neat from the outlook.
what are some steps that i can take to take advantage of this? or maybe i should just ignore it all together?
After i’ve listened to some people’s advice here, i believe instead of pondering at the hundreds of “qualified” listings on MLS, i should start searching for motivated sellers instead of properties. everyone please wait to hear my good news, my first purchase and many more yet to come. (ps i am the typical no money no credit person. haha)
You could always look at those REO properties on the MLS. It’s good experience to get into as many homes as possible, so you can get an idea of work that needs to be done, and what is common in your area. 1 picture of the outside will not tell you much, really.
The beauty of real estate is that you can focus on any area you want, such as the pre foreclosures or the bank owned.
thanks a bunch.
so basically there is nothing special about those properties, just same chances to be a good deal as any other ones.
why are Canadian banks then worry about foreclosures? since they have to sell at FMV, most likely they will get a profit in their sales?
here is my guess, i dont know if its correct. banks are allowed to loan up to 19 times their actually net worth, so when a 200k house became forclosure they become a 200k liability, which ties up the banks ability to loan up to 19 times that amount to other sources, which is 3.8 million. that is why they dont like forclosures.
that is my guess, can you confirm if that is true?
That is exactly why banks don’t want to hold houses. They don’t necessarily get FMV for the foreclosed properties, either. They do need to be careful about how high they list the property over what the original mortgage was. They don’t want the former owner to come back with a lawyer saying they were ripped off.
Banks lose money each day they hold a property. They are not in the real estate business, just the loan business.
One thing when buying a bank property - there are more hoops to jump through than if you worked with an owner direct (most times, anyway ). There may be seasoning issues, and of course the homes are ‘as is’. Things may be different ‘up north’, but I don’t imagine it would be by much.
Even though the bank may “try” to sell the property at FMV, they may still accept less. You won’t really know how much less than FMV the bank will really accept unless you make an offer. Often, the longer the bank has held the property, the more flexible they become in negotiating price.
Why not just figure out how much you can afford to pay to make the deal work for you. Then, offer about 10% less than your maximum to give you some negotiating room.