What is the difference between foreclosures or pre-foreclosures in BC? That’s what we get asked quite often. So let’s clarifying what is really being asked here You want to know whether the properties on the list are at the stage in the foreclosure process that is the most accessible to you and allows you to go in without having to compete with other bidders.
Let’s explain it like this: let’s say Joe just got laid off yesterday, and he’s worried about how he will make his mortgage payments. At this point, he is not in default yet because he made his mortgage payment last month.
But he is probably considering selling his property because he doesn’t know if he can find another job and continue to make mortgage payments. Most investors consider this a “pre-foreclosure” situation, because the foreclosure process has not started yet.
>Demand Letter / Petition
3 months pass by, Joe still doesn’t have a job, and he’s missed 3 months of mortgage payments. Now his bank/lender sends him a demand letter asking for full payment of his entire mortgage immediately. Joe can’t pay it, so the bank/lender begins a legal process called a foreclosure in which the bank/lender will legally repossess his house. This is done by making a Petition in Supreme Court.
At the Petition, the Judge will give Joea Redemption Period, a set period of time to allow Joe to sell the house or repay the mortgage by other means. The Redemption Period is usually 6 months.
If Joe sells his house within this period, the foreclosure process stops and he would have saved his house from being repossessed. If he can’t do that before the redemption period then this will then lead to
>Court Ordered Sale
The bank/lender will now have the right to sell the property. They will usually list it with a real estate brokerage which will make it available on the public MLS.
Once an offer is accepted, it is presented to the Judge in court.
If there are no bidders in court at that time, the sale will be completed. If there are other bidders present, it is sold to the highest bidder even though there is an accepted offer from the buyer who came from a realtor. Therefore, the price may get bidded too high and the buyer must buy the property without any conditions (with cash).
>The Best Time To Buy Foreclosures
If you have a way of knowing about a pre-foreclosure situation, then by all means, offer a solution to the seller. However, at this stage, the seller, like Joe in this case, may be just thinking about selling, but not that motivated – yet. Also, they are not that accessible, you would most likely have to know the seller personally.
The foreclosures on listings sites such as canadaforeclosurelist.ca are in the REDEMPTION PERIOD
before they are foreclosed on and after they miss their mortgage payments. This is the perfect time for you to approach the sellers because they are much more motivated to sell which gives you the chance to buy the property at a significantly reduced price.
And this is before it gets listed on the public MLS and before it is auctioned at the courthouse, which protects you from being out bidded by someone else – even if only for $100 more.
Also, you can buy the property normally with a mortgage and with conditions, unlike a court auction which requires you to pay in cash.
Aiden, who came from humble beginnings, is a highly successful real estate investor who specializes in real estate foreclosures and flipping properties throughout Canada. His company, CanadaForeclosureList.ca provides education and tools to aspiring and experienced investors to maximize their income in the shortest time possible. To know more visit http://www.canadaforeclosurelist.ca/