Friday, March 13, 2009

POS property purchasing something of lower value?

I had another question about power of sale properties and I thought I would share the question and my answer, Mark

Hi Mark,

I've read through your section on Power of Sale & found it very helpful, but I just don't understand this one point & was hoping you can clarify for me - "One saying about Power of Sale Properties is "you get a lower price but it's a lessor product" " - does this mean I may be purchasing something of lower value?

Thanks in advance,

SL

Hello SL,

Thanks for your comment and question. Yes, generally speaking you are purchasing a lesser product. This means that the property you are purchasing may not have window coverings, appliances etc. included and the property could require some renovations or improvements.

In addition to this you are taking more risk such as the seller redeeming before closing, no warranties on anything, buying as is, where is, etc. so you are effectively purchasing a property with less inclusions and higher risk compared to 'regular' properties for sale in the same area. With this said, this is why you will usually be able to purchase a POS at a lower price.

I hope this helps.

Please let me know if you have other questions.

Mark

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