Homes being Sold by Power of Sale

When a home is being sold by power of sale it means the mortgage lender, not the homeowner, is selling the property. It's a remedy available to a lender when the homeowner defaults on their mortgage. If you are looking to purchase a home that is being sold under a power of sale, as a buyer, there are some important things to consider about power of sale transactions.
 

• ​The bank is required by law to try and sell the home at fair market value. Even if they bank has a smaller mortgage loan outstanding on the home, they are still required to try and sell the home at a fair price.

• In most cases, the mortgage lender usually reduces the listing price if offers do not start coming in quickly.

• Be aware that the lender will not give any warranties about the condition of the property. That means it will be sold in "AS IS" condition. A homeowner in the process of  losing their home may not be able or motivated to keep up good home maintenance or repair. As with any property, the best way to protect yourself is to make sure any offer to purchase that you submit is conditional on your satisfaction with a home inspection.

• In some cases, you can get a good deal when purchasing a property under power of sale. However, if you love the home and there seems to be a lot of interest from other buyers, be sure not to bid too low to start or you could potentially loose the home to higher bidder.

• You should know the lender may include a clause that gives the owner a "right of redemption" meaning the sale can be called off if the owner brings the mortgage back into good standing with the lender before your deal closes. 

• There are legal issues to consider if the property is occupied by either the owner or tenants. If you are interested in keeping tenants on to help with the mortgage, speak with your lawyer about your rights and responsibilities.

• Finally, you will want to have your lawyer review all the documents associated with the transaction to ensure the title to the house is properly placed in your name.
  
  
  Do you have questions about financing for a home that is for sale under power of sale?
  
  Give Jenna a call at 613-242-1503
  
  
  

   

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