HOMEFINDER: Foreclosure sales – more than meets the eye
As we roll into the fifth week publishing HomeFinder, we’re discovering there are always exceptions to well-established rules.
Take December, for example. The number of listings traditionally drop a little lower as home sellers take a break for the holidays. But not everyone is content to focus mainly on socializing and enjoying some well-earned time off, as we discovered in a recent email from a HomeFinder reader.
This correspondent told us about a townhome listing he and his wife checked out just before Christmas 2012 in Langford. Turned out it was a foreclosure sale and to make a long story short, they put in a relatively lowball offer and it went unchallenged during the required court proceedings.
We wondered just how common their experience is in Greater Victoria. Apparently not very, according to local realtor Dale Sheppard, who has worked on a number of foreclosure sales over the years.
“For the most part (the home) generally goes for fair market value,” he says.
There’s various reasons for that, Sheppard explains. Not only are lending institutions mandated to get as much as possible for the home, he says, once an offer is accepted and conditions lifted – as with traditional vendor home sales – the accepted price is then made public and a court date set. That information usually attracts other potential buyers who usually drive the price up.
Sheppard says the final decision on who gets the home lies with the presiding officer of the court, but it frequently goes to the highest bidder.
Come court time – hearings are almost always held in “chambers” upstairs in the Victoria Law Courts building – the process somewhat resembles an auction. Additional bids to the original are presented and made known to all in attendance. Then, to level the playing field, the interested parties are sent out of the room to determine their final bid, which is put in a sealed envelope before everyone comes back into chambers.
“Sometimes people will overpay for a foreclosure, because they get caught up in the whirlwind of (the bid process),” Sheppard says, adding it can be challenging for novices to know just how much to bid. “That’s why it’s important to work with a realtor who can give you the realistic fair market value of a home.”
While it’s anyone’s guess who might show up at a foreclosure hearing, he believes that the initial “buyer” of such homes have a “home-field advantage” of sorts. By that, he means they’ve presumably done all the work, like having the appropriate inspections done and removing any outstanding conditions to be able to purchase the home.
The number of people actively keeping track of foreclosure sales today in Greater Victoria has dwindled from the heavy growth period – in terms of prices – of 2001 and 2008, Sheppard says. With the market holding prices relatively flat, “flipping” houses doesn’t happen as often, he adds.
“There’s a lot of buyers who ideally would like to do that if the opportunity arose,” he says, “but most are aware that it’s not the market for that right now.”
– Don Descoteau