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11. Analysis necessary by the bank whether POS remedy is appropriate

| POS Overview | Bank Options | Legal Aspects| Standard Charge Terms | POS Considerations | Quit Claim | Foreclosure | Power of Sale | Issues | Sale Price | POS Process | POS appropriate? | Clauses in Offer | How will Mark Protect you? | Conclusion | Power of Sale Properties from our company

 


Before a bank or lender considers selling a property under the provisions of the POS clause contained in the mortgage, they do a thorough analysis to determine if they should proceed selling the property by POS or use another remedy open to them

Some of the considerations are:

  • it is the quickest and most efficient remedy for the bank
  • this method is most fair to the owner, as any surplus is given to owner
  • but, there are potential problems regarding possession as outlined above
  • the bank/mortgagee must be aware of it's obligations to
    • serve notice of sale
    • wait during redemption period
    • obtain a proper price
    • accountable to owner and subsequent encumbrancers

    This is one of the main reasons why Power of Sale properties are listed on the MLS in Ontario, as the banks receive the following benefits:
  • list price is carefully set
  • the property is widely marketed when the bank uses a realtor
  • by placing property on the open market the bank is making an attempt to expose the property to the largest audience possible and attempting to obtain the highest price reasonably possible
  • since sale of residential property through real estate agents is done using standard terms and conditions in the agreements, there are certainly unique concerns regarding the agreement of purchase and sale when it come to a power of sale property

The next section talks about the typical clauses in a POS offer and the clauses that I recommend that you insert in your offer

 


This series of articles about Power of Sale Properties, Foreclosures and advice when you purchase a power of sale property is brought to you by A. Mark Argentino, P.Eng., Broker.  Please understand that these are my personal thoughts and experiences, do not use my information herein as legal advice and always professional seek legal advice on any issue pertaining to real estate and especially Power of Sale.

| POS Overview | Bank Options | Legal Aspects| Standard Charge Terms | POS Considerations | Quit Claim | Foreclosure | Power of Sale | Issues | Sale Price | POS Process | POS appropriate? | Clauses in Offer | How will Mark Protect you? | Conclusion | Power of Sale Properties from our company

 

If you have any questions or require further information about Power of Sale properties or anything to do with real estate, please send me an email

I can assist you with all of the complexities when you purchase or sell your next home.  Please don't hesitate to email me

Thank you,
Mark

You may read more about Power of Sale, Bank Sales and Foreclosure Properties

or go back to list of Real Estate Helpful Articles

Use the form below and you will receive your FREE list of all the Power Of Sale | Estate Sale | Fixer Upper properties from ALL the Real Estate Companies across the GTA matching your specific criteria - You may for More Information & Save Thousands of Dollars.  Receive ALL New Listings That Match Your Home Buying Criteria e-mailed to you free of Charge.

What is a Foreclosure Property?  What is a Power of Sale Property?

Why is this service useful to you?  If you receive these notices first, before anyone else, you will be the first to see the property before most other buyers and then you can potentially purchase the property before others have even seen it!  We are then able to help you negotiate the lowest possible price when you purchase your property through us!

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Definition of Foreclosure or Bank Foreclosures

A situation in which a homeowner is unable to make principal and/or interest payments on his or her mortgage, so the lender, be it a bank or building society, can seize and sell the property as stipulated in the terms of the mortgage contract.

Power of Sale and Tax Sale properties - questions and answers

What is a Power of Sale Property?Power of Sales Properties

When a borrower defaults on a home mortgage, the lender may attempt to recover its losses by selling the property under power of sale.

Definition of Power of Sale:  A clause commonly inserted in a mortgage and deed of trust that grants the creditor or trustee the right and authority, upon default in the payment of the debt, to advertise and sell the property using standard methods such as the MLS or at public auction, without resorting to a court for authorization to do so and without actually taking possession of the property.

Once the creditor is paid out of the net proceeds, the property is transferred by deed to the purchaser, and the surplus, if any, is returned to the previous owner (the debtor).  The debtor is thereby completely divested of any interest in the property and has no subsequent Right of Redemption—recovery of property by paying the mortgage debt in full once title has transferred to the new buyer.

You will often see advertisements about Court Auctions, Pre-Foreclosures, Homeowners in Bankruptcy, HUD Homes, VA Homes, Government homes and similar sounding wording.  In my experience, many of these types of investment property opportunities come out of the US and are not as common here in Ontario.  In our trading area, most of the POS, Tax Sale properties or foreclosure properties are put on the MLS before they reach the point of foreclosure.  The reason for this is that our provincial laws are very strict about the procedure and marketing of a power of sale property and the company or person who is initiating the power of sale must do their best to obtain what is called TRUE market value as opposed to fair market value for the property, otherwise if the property is sold too far under TRUE market value, the owner could sue them for the difference.  Another reason is because power of sale is much less expensive remedy for the lender to attempt to get their money back.

What's an estate sale? What is a Distressed Sale?   Why fix up run-down homes?  Sadly for the previous owner, the answer is simple: Your potential accelerated wealth creation.

Adding value to run-down homes through quick cosmetic rehabs is one of the most powerful leverage tools available to property investors.  Traditional 'buy and hold' strategies are too slow for the investor looking for accelerated wealth creation.  On the other hand, buy and hold strategies show strong price growth over time and seem to work well here in Ontario and the GTA.

Please understand that these are my personal thoughts and experiences, do not use my information herein as legal advice and always professional seek legal advice on any issue pertaining to real estate and especially Power of Sale.

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| POS Overview | Bank Options | Legal Aspects| Standard Charge Terms | POS Considerations | Quit Claim | Foreclosure | Power of Sale | Issues | Sale Price | POS Process | POS appropriate? | Clauses in Offer | How will Mark Protect you? | Conclusion | Power of Sale Properties from our company

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