Thursday, April 12, 2007

Power of Sale Properties - Are they the 'great deal' that you think?

Power of Sale Properties - Are they the 'great deal' that you think?

I received an email with some questions about Power of Sale Properties and thought I would post the questions and answers here.

Hi Mark,

... you sent an email to me with all the power of sale properties. When these homes are sold during times of distress, I understood that they would be considerably cheaper than market price. Is that so?

I also want to know if the price that is listed is the “distress” sale price or the market asking price under normal circumstances. Thanks.

Best regards,
D. VD.

Mark's answers and comments:

Good questions.

The short answer on the 'considerably cheaper than market price' is usually not. In fact power of sale properties are infrequently "the great deal" that people read about or expect.

In Ontario these Power of Sale (POS) properties must be marketed at or near fair market value for similar properties in the area for at least the first month. The reason is that the previous owner can go after the bank if they feel the bank undersold the property. Thus the banks are very careful to try and sell the properties at fair market value, at least in the first 30-60 days it's on the market.

Incidentally, I've read that Ontario is the only province that puts POS properties on the MLS listing system. This may be why POS properties are superior opportunities in other provinces. Power of sales in other areas of Canada or the US 'sound' like much better opportunities, but I am not positive on this fact.

One of the difficulties of obtaining any type of a 'great deal' in our trading area (Toronto, GTA, Mississauga Niagara Falls to Barrie to Oshawa) is that so many people have instant access to mls data that it's rare these days to see a property sell for a large amount under market value. There are just too many buyers for every possible area of the GTA that seldom does a 'cheap' property go un-noticed.

I hope this helps you understand one side of the POS equation.

All the best!

Read more questions and answers regarding Power of Sale and Bank Sales

Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829

1 comment:

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