WHY THIS GUIDE?
The Vancouver Real Estate market moves at the speed of light. To keep up, you need a strong foundation with the judgment to think critically, act independently, and be relentlessly creative. That’s why we wrote this guide — to empower you the consumer with the knowledge and wisdom to stay ahead in this market.
WHO IS THIS GUIDE FOR?
If you are outside of Vancouver or you are local based and have been looking for the best homes to buy and settle down for the most bang for your buck then foreclosure homes may be the best option for you.
Basically a foreclosure home or a court ordered sale is a home that is taken back by a bank or a lender and is usually sold through a massive discount to a new buyer (being you).
HOW TO USE THIS GUIDE?
You can treat The Ultimate Guide To Getting The Best Deals For Vancouver Foreclosure Properties as an all you need to know guide. If you feel that you have been looking for foreclosure properties for a brief amount of time and just want to learn everything you need to know then feel free to browse through the guide.
I’m sure you’ll find some new knowledge that you can use. If you have a basic grasp of the current real estate market but are looking to add a layer of depth to your knowledge then this guide is for you as well.
How To Find Your Best Family Homes Through Court Ordered Sales
So, how do you find these Court Ordered Sales? The MLS doesn’t really specify which ones are Court Ordered Sales. At least for the general public, that is.
That’s right, Real Estate Agents have access to a more advanced version of MLS with over 200 search criteria and so finding a Court Ordered Sale typically involves finding a buyer’s agent to work with you.
WHAT’S THE DIFFERENCE BETWEEN A COURT ORDERED SALE AND A FORECLOSURE?
A Court Ordered Sale is a property offered for sale by court order. This could be for a variety of reasons. If the owners defaulted on their mortgage and the lender is trying to take title of the home, then the court could order it to be sold, and so these are called foreclosures.
Other Court Ordered Sales could result from divorce, estate actions and builders liens.
Therefore, there are other ways to find court ordered sales if you don’t want to use an agent and that includes going to your local courts and looking up court proceedings, having connections with banks that would give you a heads up on upcoming court ordered sales, finding them through divorce lawyers, etc…
However, the simplest way is to hire a buyer’s agent to do the search for you. They can narrow your search by city, neighborhood, type of Court Ordered Sale and more and can even have them automatically sent to you on a regular basis.
After you find the Court Ordered Sale, go out with your buyer’s agent and go look at them just as if it were a regular home. Check out the condition, the neighborhood, access to transit and the other things you are looking for.
Chapter 1: The Questions You MUST Ask in Court Ordered Sales
Find out what the situation is with the foreclosure. Have your buyer’s agent ask the following questions:
- Do the owners still live there or have they moved out?
- Are there any tenants living there? If so, what’s the situation there?
- Is the property “sold as is, where is”, or are certain appliances included?
- Why is the home a court ordered sale?
- Is it a bank foreclosure?
- Has there been an accepted offer yet? If yes, then…
- Has a court date been set yet? If yes, when and where?
Not only should your buyer’s agent ask a lot of questions, he/she should be doing some research on the property as well.
My builder client sent me this court ordered sale in Richmond and was really interested in making an offer for it. I looked it up, asked the listing agent a whole bunch of questions, googled the address and found out the following:
Horrible Location – It was located next to the sewage plant. Who would want to live there?
Agricultural Zoning – It was a small house on acreage (30,000 sq ft), with agricultural zoning so you couldn’t tear down the home and build homes, not a good property for builders.
Mafia Home – The home belonged to an infamous Mafia Boss. When I googled the address, several news articles showed up talking about police raiding the property and finding crates of smuggled tobacco and such. Great for resale, right? WRONG!
Obviously, I highly recommended my client NOT to buy it because of the obvious reasons.
Chapter 2: Forgetting to Read This in a Court Ordered Sale Could Mean Disaster
So, you found a great Court Ordered Sale and you asked the questions and now you’re about to make an offer. The listing agent will likely send a package of documents to your buyer’s agent and included will be a form called a “Schedule A”.
The form is in fine print but read every word on this form. This form basically states that you’re buying the property “as is, where is” and that there are no guarantees or warranties to the property and is subject to court approval.
After you read it, remember if you decide to make an offer later, it MUST include a signed copy of the Schedule A.
If you’re buying a foreclosure and the seller hasn’t moved out yet, the home may be gutted when you take possession of the home.
What does that mean? This means, when you saw the home when the seller was there, it was probably in great condition with all these nice appliances and high quality finishings, but after you left, the sellers got mad at the bank for taking their home and decided to take everything they could from the property. This includes APPLIANCES, HARDWOOD FLOORING, CARPETS, LIGHT FIXTURES and even WALLPAPER.
The To-Do List After Getting an Accepted Offer for a Court Ordered Sale
So, you got the accepted offer. Now, it’s time for you to do your due diligence. You wrote an offer full of subject clauses, right? There’s many ways to do your due diligence, but here a few PRIMARY TO DO’S at this point:
- DO Send the paperwork to your bank or lender
- DO Get their financing approval IN WRITING
- DO a Home Inspection
- DO an Oil Tank Inspection if it’s an older home
- DO get a copy of the title search
- DO call the municipal city hall to find out anything else about the property (ex-grow op, legal or illegal suites, etc…)
- DO review the results of the findings with your buyer’s agent
- DO talk with your buyer’s agent about what will happen next
Now what? I did my due diligence and I removed the subjects, is the deal firm? Is it mine now?
No, not yet! As I mentioned above, you had to sign a Schedule A and it specified that your offer was subject to court approval, a court date will be set and so onto court you go!
So, what if you lost out on the bidding war and someone else got the accepted offer? Then, that means, they’re doing all the due diligence noted above. Wait, does that mean I should just let someone else do the due diligence so I don’t have to? Not necessarily, because the other buyer might not do their complete due diligence.
They might skip out on the Oil Tank Inspection, etc… They might be a builder and skip out on the home inspection. If they did the due diligence, then great, you can just wait for a court date to be set. If not, it’s highly recommended you do your due diligence.
Chapter 3: How to Prepare for Battle on Court Ordered Sales
So, what happens after a court date is set? You show up 30 min before the allocated time ALWAYS WITH your buyer’s agent. Check the court room number and you see if you can find the listing agent. Ask him if he expects other buyers to be here. If yes, be prepared. Why? You’ll find out.
Here’s what happens:
- Before the court time starts, other buyers will show up and submit their SUBJECT FREE OFFERS in a sealed envelope to the listing agent.
- Court session commences.
- The listing agent will present the envelopes to the lawyer who then presents it to the judge.
- The judge opens them all and can do a number of things:
- Pick the best offer (combination of best terms, deposit, price)
- Reject them all and push it back to everyone there, request them to revise their offer and come back in 20 min with their strongest offer
- Pick the 2nd best offer if the 2nd best offer is not too far off from the best offer and it belonged to the 1st buyer who negotiated the accepted offer, did all the due diligence and got the court date set.
- Reveal the offer amounts out loud
- Open up the floor like a live auction
- Basically, do anything he/she wants
What should you do then? If you were the one that got the accepted offer, be prepared to revise your offer with your buyer’s agent on the spot. Now you know why I said you ALWAYS bring your buyer’s agent with you.
If you lost to another buyer to get the accepted offer and just showed up on the court date, make sure you put your best offer (below market value remember) forward, because you might not get a second chance.
Chapter 4: How Not To Lose In Court Ordered Sales
When you’re looking at purchasing homes that are court ordered sales, you’ve got to be careful. If you are careful, you will prosper.
A couple points to remember:
- Don’t forget to READ AND UNDERSTAND ALL OF the Schedule A form.
- Don’t forget to offer BELOW MARKET VALUE for the property. You are bearing the risk and if you were the 1st buyer who got the accepted offer, you might lose the sale on the day of court to other buyers and then there goes your due diligence and money spent on inspections.
- Don’t forget to hire a BUYER’S AGENT to walk you through the process and REMEMBER to bring him/her to court with you.
Buying a court ordered sale can be a disaster if you walk into blindly. Just as if you were going into a used car dealership filled with repossessed cars, pick out a car and buy it without doing your due diligence. What if you buy a lemon?
If you do your homework and filter out the poor court ordered sales, you can easily buy great homes at below market value. Once you do, then there are plenty of opportunities to generate a killing in profits!
If the home is in poor condition but the home is in a great neighborhood surrounded by great homes and close to transit and schools, then you can renovate it and flip it after a few months.
If the home is in good living condition, you can flip the home right away for a quick profit.
If the home is in good living condition and in a great central location, you could rent the property out and generate positive cash flow.
REMEMBER, all these can be possible IF you pay BELOW MARKET VALUE. Discuss with your buyer’s agent your plans and he can open up your mind to the vast opportunities of real estate investing.
If you’re new to buying homes and you’d like discover how you can find your best and most affordable foreclosures homes in Vancouver through a court ordered sale. Then call Gary today at 778-862-9787 or fill out this simple form.