Thinking of buying a power of sale home?….things to consider first
What exactly is a power of sale: It is when a home is being sold by power of sale, which means the mortgage lender and not the homeowner is selling the property. This will happen when the homeowner defaults their mortgage.
When considering this type of purchase you can’t expect a discount because the current homeowner would have no emotional attachment so that is something that would have now been eliminated. The lender is now obligated by law to get market value for the home.
Understanding that you should be aware to not consider any of the appliances in the home purchase as these (refrigerator, stove or dishwasher) may not be included in the sale if the lender doesn’t have ownership of them.
Be cautious with the condition of the property as there may not be any warranties. The property will be sold “as is”. Do consider understanding that the homeowner is in the process of losing their home and will not feel motivated about maintaining the home including any repairs or maintenance that may be needed. Therefore, ensure to protect yourself. When submitting your offer, be certain that your offer is on conditional bases. Your satisfaction and home inspection is a must.
Another factor to be aware of is to make sure there is no clause that gives the owner the right to reclaim their home if the owner brings the mortgage back in good standing before the deal closes.
Don’t forget to also consider the legal issues if the property is either the owner or tenants. If you are interested in keeping the tenants to help sustain your mortgage, be sure you speak to your lawyer about your rights and responsibilities. You’ll want your lawyer to review all legal documentation related to this transaction so that you are certain the title to the house is solely in your name.
Although it can be great to be the buyer of a power of sale home, being on the other end can truly be a devastating position to be in. Here at Noble Mortgages we never want to see our clients in such an awful dilemma. We have qualified mortgage agents that can assist you in choosing the rate and monthly payments that are affordable and customized to you, so you’ll never feel at a loss.
We are always here and committed to helping all our clients.