12 Oct Buying a “Power of Sale” home?
Buying a “Power of Sale” home?
Here’s everything you need to know before you do so.
A home is sold by “power of sale” when the homeowner falls behind on their mortgage payments. The property is then sold by the bank to cover the amount still owing on the mortgage.
People are intrigued by the power of sale properties because they expect to get a deal. But the bank’s goal is to get market value for the home.
The bank is not able to assure people on the condition of the property due to lack of knowledge. Although, when working with a seller, you can tell them to repair certain issues as apart of the transaction.
A home inspection may be a good idea from a qualified home inspector, engineer or contractor. They can identify problems with your home’s heating and cooling, electrical, foundation, and so on. Depending on inspection results, you can make an offer on the property. This Agreement might allow you to walk away from the deal if the inspection uncovers a pricey issue that you don’t want to deal with.
If the owner or tenants are living on the property, it would be a good idea to seek legal advice. Your lawyer will provide a search for any issues, including liens against the home. He/she will also go over the bank document with you.
Be aware that the offer process may take a little longer than normal because the bank has processes to follow and so do their employees only during business hours. The bank may also cancel the deal if the owner has caught up to their mortgage payments. Banks rarely cancel a sale. Although, it is still a good idea to find out if they include a “right of redemption” clause in the Agreement of Purchase and Sale.
A power of sale home is a great idea, but it is important that you understand all there is to know about it and any potential issues as well.