Taking Advantage of foreclosure Homes, Power of Sale & Rundown Properties



What Do Foreclosure Homes & Power of Sale Mean? 

In Canada, there are two ways that a lender can recover funds from a default on a mortgage. Power of sale, which is practiced primarily in the provinces of Newfoundland, New Brunswick, PEI, and Ontario, involves very little influence from the court. Judicial sale is the common practice of British Columbia, Alberta, Saskatchewan, Manitoba and Quebec. Nova Scotia uses the term “mortgage foreclosure” but it is also considered judicial. 

As “power of sale” was initially developed in Ontario by lenders who wanted a faster way to dispose of property and recover debt you’ll find that foreclosure proceedings in Ontario are quite speedy. More often than not the structures to carry out quick foreclosures through power of sale provisions are often laid out in the original mortgage documents themselves. This can allow lenders in Ontario to sell property after the borrower’s default (15 days notice) without having to resort to the courts. 

Are they Real Bargains for Home Buyers?

All such legally forced sales are not good bargains. It depends on the Lender policies and what is the total amount of default for recovery as compared to current value of the subject property. Most of the lenders may go for upto 3 appraisals in the process and price it for the highest appraised value. On the other hand, there may be times when the amount to be recovered is very less for the lender and a formal appraisal was not done. Or even if the appraisal was done, it was for a considerably lower price, in such cases what is left on the table may be attractive bargain. Sometimes as much as 10%-25% lower then the market value. Your Qualified and experienced REALTOR® may be able to give you some insight here after doing a comparative market analysis for the subject property. 

What about the Money required For Renovations?

Many times, you will find that above property may not be in the greatest shape. If considerable savings are on the table with the help of a qualified contractor, you can estimate the amount required to restore such property. Based on that you will need to prepare your offer and offer what is reasonable for the property. If price is finally agreed by all parties involved, you will need to apply for a Mortgage which is able to give you Renovations credit based on the formal quotation of your contractor. Such mortgages take little more time for approval. Your Qualified and experienced REALTOR® may be able to refer you to few such lenders/Brokers who can help you with this requirement.

Is it meant For You?

If you are kind of Buyer, who is looking for a bargain i.e. getting a property lower then market value? Well then keep in mind…..no pain….no gain is what you need to remember. You have to take a calculated risk with help of your Qualified and experienced REALTOR®, Contractor and then a Home Inspector. 

If you want to buy a ready to move in, shining and well priced property under the market value or even on right value…..then welcome to the club of 1000s of Buyers who share this dream with you i.e. “I want best for less”. You shouldn’t be surprised when you see multiple offers on table for such property……as buying such property without competition is a rare chance no matter which time of the year. 

Sometimes when budgets are tight buying fixer upper homes and condos can be a better solution, specially if your REALTOR® have shown you few shortlisted houses as per your wish list and they are costing more then what you can afford.

What can we do for you? 

We help Our Home Buyer Clients in following ways under such circumstances: 

1. We 1st try to Understand Your Goals and your risk taking abilities by showing you few properties of all types. If we feel you are not able to see beyond cosmetics of the home……we will try and find for you ONLY the properties which are ready to move in. In such scenario, fast reaction is extremely important as such properties don’t stay for very long in the market. We have set up a unique Buyer’s profiling system, which will advice us within few minutes, when a property matching your criteria of selection comes in the market. As by the time it touches the public MLS…..it may already be sold. So, with us, you will be informed immediately for any such property and if you are available, we will schedule a showing for you right away. This will put you ahead in the game as if you will be interested in pursing this further, we will try to present your offer same day to secure such property for you. 

2. If you are the Investor’s category who is willing to take the risk to get the bargain, we then target Run down homes for you which can be power of sale/bank sale, private or public sale. Experienced REALTOR® always have ways to sense the pressure of a Seller. With our experience, we are able to give you rough estimate of the project right away before you even decide to consider it. If you end up liking what is on the table, we will start the negotiation process with the Seller. Once price is agreed, we will, with the help of one of our discounted contractors and a licensed inspector help you determine exact cost of such renovations. If all looks acceptable to you, we further help you get in touch with Mortgage Brokers, who can get you Mortgages with renovation loan. Once all such conditions are fulfilled and you are satisfied with everything on the table, we help you firm up the transaction. All above professionals are arranged for, if you request to do so. It is not a mandatory requirement to hire whom we are recommending. If you have your own preferred renovators, inspectors or mortgage lenders, we will be more then happy to work with them. 

Important thing to keep in mind on Foreclosure homes and power of sale properties is that they come without any kind of warranties from the Seller i.e. they are always sold as is. Further all lenders don’t fund such properties. Also in most of the cases, such sale is revocable in nature i.e. the seller have right to cancel the sale even after deal is firmed up, if previous owner come forward clearing their financial obligations towards their lender. Your qualified REALTOR® will always help and try protecting your interest by suggesting you the best strategies for such situations. 

Still not sure, if this is for you? Call me today to set up your no obligation consultation directly @ 416-738-7331. I will be happy to answer all your questions. 


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Move-up purchasers set to increase their stake in homeownership in 2013, despite overall trend toward moderation, says RE/MAX

Against a backdrop of strong equity gains and lower interest rates, move-up buyers are once again set to ramp up their role in major Canadian housing markets.

That’s the key finding of the RE/MAX Move-Up Buyers Report 2013, which examined sales and trends at trade-up price points in 16 major centers throughout the country.

Serious equity gains remain the strongest catalyst in the Greater Toronto Area over the past 10 years, prompting healthy home buying activity in trade-up neighborhoods from Scarborough to Mississauga and all points north.
10-year appreciation—81 per cent (6.09 per cent annually)
Five-year appreciation—32 per cent (5.74 per cent annually)

Last year, sales of move-up product identified as single-family dwellings priced from $500,000 to $700,000—were up eight per cent over the previous year and represented 20 per cent (17,218) of the market. In 2011, 15,855 sales occurred at that price point, accounting for 18 per cent of overall home buying activity. The level of activity
in the move-up segment is expected to increase in the year ahead as first-time buyers take a backseat to more experienced move-up purchasers. Supported by higher down payments as a result of solid price appreciation in recent years and augmented by today’s low interest rate environment, the timing is ideal for many to trade-up to larger homes and better neighborhoods, or make lateral moves to condominium product in the downtown core. To illustrate, homeowners who bought homes in 2002 at an average price of $275,231 typically sold in 2012 for an average of $497,298—a percentage increase of 81 per cent over the past decade representing an annually compounded rate of return at 6.09 per cent. Even those buyers that purchased just five years ago have realized a 32 per cent increase on their original investment. Singles, semi-detached, and towns/row houses have been most popular with move-up buyers, with almost 90 per cent of sales in the price range involving a freehold home. Just 10 per cent of sales involved a condominium at that price point. Inventory levels remain a challenge within Toronto proper—with fewer than 300 single-detached homes currently listed for sale in the $500,000 to $700,000 price range from Victoria Park to Islington, north to Steeles Ave.

While the arrival of the traditional spring market should prompt an influx of new product to the marketplace, the number of homebuyers is also expected to climb. On the other
hand, supply in peripheral areas the 905 suburban markets has increased, allowing purchasers the luxury of time and choice. Property types in markets like Thornhill, Maple, Richmond Hill, Markham, Brampton, Mississauga, Whitby and Ajax run the gamut, with both older and newer product available from $500,000 to $700.000. Not surprisingly, purchasers in outlying areas tend to prefer turnkey properties requiring little or no renovation whereas buyers in more established areas within Toronto proper are more willing to undertake renovations to improve accommodations. Given the city’s solid economic footing and positive employment picture, demand for residential real estate is expected to continue at a healthy pace throughout 2013, with sales on par with last year’s levels.

There’s no question that the equity position of Canadians has been remarkable. Yet, gains remain well outside of bubble territory, particularly in the often-cited markets of Vancouver and Toronto. Overall, healthy fundamentals remain in place, as enthusiasm climbs among experienced home purchasers.

In fact, the report also noted that the time between moves has actually decreased among move-up buyers, with most now prepared to move within four to seven years of their original purchase. Why such confidence? The move simply makes sense. With today’s rock bottom mortgage rates, many are able to secure a larger home and/or better neighborhood, while taking on carrying costs just slightly higher than their original payment.

Tight inventory levels, meanwhile, are hampering activity to some extent in Edmonton, Calgary, Regina, Saskatoon, Winnipeg, Toronto proper, Hamilton-Burlington and pockets of St. John’s. Unless conditions improve, continued upward pressure on pricing is expected in the months ahead, but even that is prompting some to act sooner rather than later.

The supply crunch has created a bit of a catch-22 in some markets, as homeowners hold off listing their current home, concerned they won’t find an ideal home to trade up to, ultimately exacerbating the inventory issue.

Yet, on the whole, the outlook remains positive with Greater Toronto Area demonstrating solid move-up activity out of the gate in 2013. Move-up buyers remain firm in their belief that home ownership is a sound investment. Most realize that very few financial vehicles provide the security and dual purpose that home ownership affords. They also realize that opportunity is not finite—one reason that move-up markets remain well-positioned for the year ahead.

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REMAX Mississauga Home buying Trends 2013_2014

Watch Remax Ontario Survey done with 1100 Buyers to forecast Canadian Condo & Housing Market Trends for 2013 & 2014. Find your home today with @ http://www.SearchMississaugaHomes.ca

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2013 Canadian Housing Market Outlook – By Remax Ontario

Mississauga, ON – Canadian real estate markets demonstrated remarkable resilience in 2012— with home sales up or on par in 65 per cent of major centers—despite considerable headwinds in terms of tighter financing and economic uncertainty abroad. The trend is expected to continue, with home-buying activity propped-up by low interest rates and an improved economic picture in 2013.

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Strong Average Price Growth in September

As per latest report from Toronto Real Estate Board (TREB), released this month, Greater Toronto Area (GTA) REALTORS® reported 5,879 transactions through the TorontoMLS system in September 2012. The average selling price for these transactions was $503,662, representing an increase of more than 8.5 per cent compared to last year.

The number of transactions was down by 21 per cent in comparison to September 2011. However, it is important to note that there were two fewer working days in September 2012 compared to September 2011. The majority of transactions are entered on working days. On a per working day basis, sales were down by 12.5 per cent year-over-year.

“While sales have been lower due to stricter mortgage lending guidelines, we continue to see substantial competition between buyers. The months of inventory trend remains low from a historic perspective, which explains the strong price increases we are experiencing,” said Toronto Real Estate Board (TREB) President Ann Hannah.

September average selling prices were up compared to last year for all major home types. Price growth was strongest in the City of Toronto, including for condominium apartments with eight per cent year-over-year growth. All benchmark home types included in the MLS® Home Price Index (MLS® HPI) experienced year-over-year price increases, with substantially stronger increases for low-rise home types.

“Barring a major change to the consensus economic outlook, home price growth is expected to continue through 2013. Based on inventory levels, price growth will be strongest for low-rise home types, including single-detached and semi-detached houses and town homes,” said TREB’s Senior Manager of Market Analysis, Jason Mercer.

Download this complete report @ http://www.torontorealestateboard.com/market_news/market_watch/2012/mw1209.pdf

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Average Home Selling Price Up by 7.1%

Greater Toronto REALTORS® reported 7,570 sales in July 2012, representing a decline of 1.5 per cent compared to 7,683 sales reported in July 2011. The decline was most pronounced in the condominium apartment segment in the City of Toronto. Total sales in the rest of the Greater Toronto Area (GTA) were up compared to the same period last year.

“Very strong annual sales growth in the first half of 2012 and an earlier peak in sales this spring compared to 2011 help explain more moderate sales this summer. New mortgage lending guidelines and the additional upfront cost of the City of Toronto land transfer tax also prompted some households to put their buying decision on hold,” said Toronto Real Estate Board (TREB) President Ann Hannah.

The average selling price in July 2012 was $476,947 – up by four per cent compared to July 2011. The MLS® Home Price Composite index, which allows for an apples-to-apples comparison of benchmark home prices from one year to the next, was up by 7.1 per cent year-over-year.

“The GTA housing market became better-supplied in recent months. Buyers benefitted from more choice in the market place, resulting in less upward pressure on the average home price in July,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

“The mix of homes sold in July 2012 versus July 2011 also appears to have changed, further influencing the average selling price. This is evidenced by the different annual rates of growth between the overall average price and the MLS HPI®,” continued Mercer.

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How will New Mortgage Rules Effect GTA Home Sales?

By now, most of you must be aware of new mortgage rules in effect starting July 9th 2012. If you are not aware of these rules…..please review my June blog on the subject.

In Nutshell, how these rules will effect you….will be affordability of what you can purchase. For example someone who could previously afford $500,000 mortgage, now due to new rules in effect, their affordability have dropped down to Approx. $400,000. Just to keep it simple, all these rules combined make the affordability drop by 15% – 20%.

This is expected to force Bank of Canada to maintain existing low interest rates for a while. Which may encourage all major retail banks to reduce their lending rates to end consumer to reduce this gap between affordability and home prices. We can already start seeing this happening as lowest 5 Years & 3 Years Fixed rates now available currently are as low as 2.89% & 2.69% respectively. Such incentives will reduce that affordability gap by 10% – 15% instead.

As summer months are historically proven to be more active for real estate business, these rules may effect the overall activity in the market, which we are already seeing happening but housing still being a basic necessity, will keep the momentum going…..even though @ slower pace compared to same time last year.

Buyers may need to weight between their needs and wants and settle for less whereas Sellers may not enjoy multiple offer situations on their properties any more. In nutshell both have to tone down their expectation levels in order to accomplish the final result.

For Qualified Buyers, who were planning to buy lower then their qualifying limits….this will be exceptional opportunity to secure something of their choice at a reasonable price with lowest mortgage rates.

Overall, these rules are for betterment for our housing market. Precaution is better then cure!

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