Buying a foreclosure in British Columbia, Canada is somewhat different from buying a regularly owned property and it is certainly different from buying a bank owned property in the United States. First of all, please understand that in BC the courts will ensure the homeowner is protected and their property is marketed and sold for an amount as close to "Fair Market Value" as possible. Whereas in the US, the laws protect the banks and properties can sell substantially well below market value. Buying a foreclosure in BC could get you a deal and save you some money on the purchase price, but rarely does a property ever sell less than 20% off fair market value.
The Foreclosure Process in most cases works like this:
After a lender has been given the right to sell the property by the BC Supreme Court, the lawyer acting on behalf of the lender hires a realtor to market the property. Please keep in mind that in BC the property can still be owner occupied and showing may be limited and sometimes difficult due to the nature of the circumstances.
When the foreclosure property, whether it's a house or condo, is listed on the MLS, the listing agent will showcase that property to as many purchasers as possible in hopes to get an offer that is suitable to the lender.
When a buyer submits a written offer, which includes a Schedule A (which amends the regular Contract of Purchase and Sale), to the listing agent, the listing agent will present that offer to the lender's lawyer and he or she will act of behalf of the lender during the negotiation. During this period the lender and the purchaser will negotiate a price they are both satisfied with.
Upon accepting the offer, the purchaser will have 5 business days (in some cases) to do all their due diligence. After the buyer is satisfied with her due diligence and she has her financing in order, she then prepares a certified deposit cheque or bank draft and remove all subjects in regards to the lender. This is now a subject free offer as far as the buyer and the lender are concerned. However, there is one last subject which is "Subject to Court Approval".
The lender's lawyer will now set a court date and this could take on average 2 to 4 weeks time. A few days before court, the listing realtor will disclose the price which the offer was accepted for. That will give any other perspective purchasers the ability to decide if they want to come to court and outbid the original offer or not. *** Unlike a regular property for sale, the first offer that comes in and is accepted by the lender is not necessarily the person who ultimately ends up owning the property at the end.
At Court the listing agent will collect all, if any, competing offers which must be subject free, contained in a sealed envelope, include a schedule A addendum, and be accompanied with a certified deposit cheque or bank draft.
When the judge has this property address file in front of her, the judge may give the owner one last time to redeem the owner's mortgage and any other outstanding debts. If there is no attempt to pay off all the debts she will proceed with the offers to purchase the property.
Should there be mulitple offers, whoever has the highest subject free bid in the sealed envelope will most likely be awarded the property. Depending if the property is vacant or owner occupied, the completion and possession could be after the court date will be somewhere between 2 to 8 weeks.
It is strongly recommended that the purchasers are in court to either up their bid or be present to initial any changes that the judge may request. There are no second chances for anyone after the judge has made her decision and there is no chance to back out of the contract.
The property is now sold and all documentation is forwarded to the parties involved for conveyance.
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