The 5 Myths Of A Power Of Sale

Power of sale occurs when a homeowner cannot make their mortgage payments and the property goes into foreclosure. Instead of giving the property away, the bank or the lender which provided the mortgage is able to sell the property to make back their lost money. If you’re thinking of purchasing a foreclosed property through power of sale, there are five myths associated with it that are debunked below.

  1. The deal is always final

    This is one of the biggest myths surrounding power of sale. Unless specified in the purchase agreement, the bank or lender has the right to cancel the deal you made if the power of sale property’s owner catches up on their mortgage payments before the deal closes. You should consult a lawyer before signing the purchase agreement of a power of sale home and have a clause put in that says the deal must go through even if the POS property owner is able to make their mortgage payments again.

  2. Power of sales take no time at all

    Yes, power of sales take less time than traditional home sales but that doesn’t mean they happen overnight. There are still legalities and paperwork that must be completed before you take ownership of the property.

  3. Properties are sold for under market value

    When it comes to power of sale properties, they may seem like a great deal but in fact, they’re being sold for what they’re worth and not under market value. Power of sale properties still have to be listed on the MLS system and appraised by accredited appraisal professionals.

  4. You can ask for repairs to be done

    When you buy a home through traditional means (not a property that has been foreclosed) you’re entitled to let the sellers know that the roof is slanted (or any other issue) and you won’t buy the home until it’s fixed. With a power of sale property, you have to buy the home as is. You can’t tell the seller, in these cases it’s usually a bank, that you need repairs done before you purchase. Whatever condition the power of sale home is in, that’s the condition you buy it in.

  5. There are foreclosure properties in abundance across the country

    The foreclosure rate in Canada is actually very low. Only about 1% of mortgages in this country are in arrears (lack of payments being made) because our mortgage lending guidelines are a little stricter than those of our neighbours to the south. Here in Canada, mortgages are usually only given out to those who will be able to pay back them unlike in the United States where approximately 13% of mortgages are in arrears. That’s not to say that you won’t be able to find a power of sale property to purchase in Canada but there aren’t that many.

Before you decide on purchasing a power of sale property, consult a mortgage broker. Although, it may seem like you’re going to get a great property for cheap, it’s not always the case. A mortgage broker can help you decide if this is worth it and recommended a realtor.

Back

Canada’s mortgage website

Your home is your most valuable asset. It is probably the single largest investment you will make in your lifetime. Your home is more than a place to rest your head and raise a family. Your home contains equity. It is a treasured resource and in some cases, can even be used as an ATM (aka cash back mortgages and HELOCs – don’t worry we’ll get there).

We All Need a Mortgage

Everyone who is looking to purchase a home will need a mortgage. But, what is a mortgage exactly and why do you need it? Besides being the term to describe a loan secured by real estate, a mortgage allows you to access funding to procure your dream home.

Mortgage Blog

10 Reasons To Use A Mortgage...

Many people have difficulty understanding how mortgages, refinancing, and home equity work—even if they already have a mortgage! Read More

How To Consolidate Your Debt With...

Many homeowners find themselves in debt at one time or another. Read More

The Importance Of Qualifying For A...

It may seem premature to apply for a mortgage before you buy a property, but in reality many potential buyers end up losing out on... Read More

3 Documents You’ll Provide...

Getting a mortgage can be a complicated experience, especially if it’s your first time. Read More

100,000
people a month

Trust us to help them save money
and make better financial decisions.

Join the monthly newsletter for financial tips, news, and deals!

Mortgage Reminder

Enter Your Renewal Date:

Please select the Square and click the SUBMIT button.

Refresh
Northwood Mortgage

We're working harder for you