Foreclosures and court-ordered sales
are two types of property sales that can occur when a homeowner defaults on their mortgage payments or fails to pay property taxes.
Foreclosure;
While both types of sales involve the forced sale of a property, there are some key differences between the two. Foreclosure is a legal process that a lender can initiate when a borrower defaults on their mortgage payments. In a foreclosure, the lender takes ownership of the property and sells it to recover the outstanding debt owed by the borrower. Foreclosures are typically initiated by banks or other financial institutions that hold a mortgage on the property.
Court Ordered;
On the other hand, a court-ordered sale is a legal process initiated by a court when a property owner fails to pay property taxes or other debts. In this case, the court orders the sale of the property to recover the outstanding debt owed by the owner. Court-ordered sales can also occur in divorce cases, where the court orders the sale of a jointly owned property to divide the assets between the parties. One key difference between foreclosures and court-ordered sales is that in a foreclosure, the lender is the one initiating the sale and is typically responsible for marketing and selling the property.
In contrast,
in a court-ordered sale, the sale is overseen by the court, and a court-appointed trustee is often responsible for marketing and selling the property. Another difference between the two types of sales is the timeline. Foreclosures can take several months to complete, while court-ordered sales typically move through the legal system more quickly. In terms of the potential risks and benefits for buyers, foreclosed properties are often sold "as-is" and may require significant repairs or renovations. Court-ordered sales, on the other hand, may offer a greater opportunity for buyers to inspect the property and negotiate the sale terms.
Overall,
while both foreclosures and court-ordered sales involve the forced sale of a property, there are important differences to consider. It is important for buyers to conduct thorough research and seek professional guidance when considering these types of sales.
Author's perspective;
In my opinion, foreclosures and court-ordered sales may not be ideal options for first-time or inexperienced buyers. These types of sales often come with higher risks and can be frustrating to navigate, as banks and courts may not be motivated to facilitate the sale quickly. Even after completing due diligence and obligations with the property owners, buyers may encounter delays and a lack of respect from the seller's representatives.
Furthermore, in Calgary's current market, buyers may have to pay a premium for foreclosed or court-ordered properties due to the high demand and competition. In such cases, the "Fear of Loss" can influence bidding, driving up the price even further.
As a real estate professional, when clients approach me looking for "deals", I often recommend exploring distressed properties owned by private sellers instead. These properties may require some repairs or renovations, but with the right skills and effort, buyers can quickly build equity and create a valuable investment. If you feel you have the skills & qualifications to build up some "sweat equity" in your next home, contact us today and we will help you make that happen!