BUYING A POWER OF SALE PROPERTY Are you considering purchasing a home being sold by power of sale? If so, you should know how such a purchase is different from most real estate purchases. This article will deal with the reason why you may have unrealistic expectations about price, and will point out some of the perils of such a purchase. The normal real estate sale involves the owner of a property who sells to a purchaser. In a sale by power of sale it is not the owner who is selling the property but rather the lender/bank/trust company. The situation arises when a homeowner has a mortgage loan and defaults on payment. In this situation the lender has the right to proceed to sell the property providing the proper procedure is followed. A lender proceeding pursuant to a power of sale must follow strict rules. There must be default in the loan and the ability for the owner to correct the default. A notice must be sent to the owner and anyone else who has an interest in the property, which states the amount due to the lender. The notice will also state a date by which the owner must pay the arrears and costs. During the notice period the lender is not allowed to take any action with respect to the property, but when the notice period passes the property can be sold. A lender, who sells a property for less than the outstanding debt, may sue the owner of the property for the shortfall. Likewise, the owner of the property may sue the lender if they can prove that the sale was made for less than the value of the property. So the lender has an obligation to sell the property for the fair value. The lender will be careful that the property is not sold for much less than this amount because they will either lose money, or open themselves up to a lawsuit from the owner. In other words you may find a good price for a property but the chances of this are the same as with an owner sold property. There are also some downsides. Most lenders require their own amendments to the agreement, which include such matters as the state of the property and the redemption by the owner. The lender will for instance give no warranties with respect to the state of the property or even the ownership of any chattels on the property. It therefore goes without saying that you will not get any assurances that the appliances work or that the property contains no contaminants. If you have any legal questions about the contract you should speak with your lawyer. Remember that no one but your lawyer is qualified to give you legal advice. BUYING FIXER-UPPER HOMES- I CAN BE YOUR REALTOR & COACH If you have decided you want to own your own home, you might consider obtaining the services of a professional real estate coach or mentor in helping you make a decision over which properties would be suitable for you. For instance, you may want to consider purchasing a house that you could fix up and make into a beautiful dream home. However, not all investments are a wise decision, and having a coach or mentor will help you protect your money and the time, especially if you do not have a lot of time to spend in building a location up. In addition, a mentor or coach will help you broker your agreement by commenting on whether the deal is fair or you should renegotiate the contract. Many people may read through a contract but if you do not have an actual knowledge about what it is that you are reading means then you could be getting yourself into a very large amount of trouble and even debt. With the help of a mentor or coach you will get to have a second opinion from someone who knows what they are talking about so that you do not have to worry about the risks as your sign the contract that could mean your success. Investing your money into the real estate business currently can be a decision that is very intelligent due to the amazingly low prices that there are currently and the fact that a few years from now those prices will be returning to the higher prices people had become to accustom to seeing. With the low prices that are being seen there are many people who wish that they could invest in homes, apartments and more to be able to fix and resell when the economy rises again but they do not have the money because of previous investments. This means that someone who buys currently while the prices are low and waits to sell until the prices are much higher is sure to get the returns that they hope for and come out ahead with the help of a mentor or coach. A coach or mentor is able to help you know what you need to in addition to being able to make sure that there is nothing that you forget because of lack of knowledge or because of forgetfulness. This means that while you make your check list of what it is that you would like to be done or while you make y our plans you have someone there to reinforce you so that if anything happens you are not the only person that there is to call. This can be helpful because if you have work during the day then you will not have to deal with constant calls from construction workers or other workers that may be taking care of your house, apartment or other piece of pad that you may be building or fixing to sell or rent out in the future. LIFE AFTER POWER OF SALE - NOW WHAT When the time comes in a few years after you have put a down payment on your rent to own home, rebuild your credit, raise your credit score; set aside an emergency fund and designed a financial plan, then you will be ready to buy your next home. Let''s face it, if you are facing the possibilities of losing your home due to a power of sale in Toronto and GTA and you think that you may never be able to purchase another home anytime soon. Keep reading. I am going to share with you different steps you need to prepare yourself for that transition down the road. First, if you lost your home because of a power of sale or you''re about to, don''t give up. The worst thing you can do right now, is to do nothing. First: Get a copy of your credit report from Equifax or Transunion to see what a potential creditor will see and immediately start making repairs to clean up any negative infractions, stay away from credit repair companies. Second: While you are rebuilding your credit, start putting together an emergency fund. Start off by saving three months of your mortgage/rent payments and three months of car payments for obvious reasons. Three: Go to your book store, library or online and start educating yourself on rent to own purchase. I mention rent to own because of your temporary credit and money requirements. You can normally get into a house with a small down payment and good credit . Just be prepared to purchase that property down the road. That''s why you need to clean up your credit and who knows, you might start making money with this new found information. Four: Start putting together your financial plan. Set goals for your future retirement, college for you or your children. Start a business. Find a financial planner one who will work with you and his motivation is not to sell you something you don''t need, just so he can get a commission. |