OT - ?? about buying a house listed as Power of Sale

[KerriMc]

Has anyone ever bought a home that has been listed Power of Sale? I looked at one today and it needs a lot of work but I have to admit that I loved the house ... the bones look good and it needs a lot of decorating (apparently someone LOVED multiple floral wallpaper patterns in nice dark colours!! lol) It needs to be painted ... has nice hardwood floors that need rebuffing, other floors all have to be replaced (carpets and linoleum). Needs to be weeded and plants cut back or ripped out as it is overgrown. The deck is lovely.

The house had been bought in 2003. They put in new windows (except for two in the back) and a new roof. The only thing is they didn't convert over to natural gas ... they are electric heat. Any idea on cost to convert to gas? It is a two storey house. I am imagining around 10,000 ... too high? too low? The list price is good so if we got it I'd be willing to do it I think.

Ok ... any ideas or tips on this would be great! Just worried that someone would be able to buy it with no conditions ... we would have to make it conditional on the sale of our current house and on condition of a home inspection of course!

 

[stefanospops]

Buying a house under power of sale is no different than buying any other house. Do your due diligence. Get the home inspection done, be prepared for the work that needs to be done, and please make sure your Realtor outlines the things you need to know. I have been a Realtor in the Greater Toronto Area for a number of years and I am amazed at how unprepared some people are when they buy homes that need to be fixed up.

If you do not have your own realtor then talk to a few to make sure you find someone who will address your needs and concerns. Make sure that they show you homes in the area that have been renovated and what are they selling for. If you pay $450,000 for a place and spend $100,000 fixing it up, but a renovated place only fetches $500,000 then the place may not make sense.

The common misconception about power of sales are that they sell for below market value. The person/bank holding the mortgage is obligated to get market value for the property. So it is not necessarily a deal over a house that is not power of sale. Further, power of sales tend to come with no warranties at all, so if there is something wrong with the house you have little recourse.

If you have further questions you can send me a PM or post them here. Good luck!

 

[tabithakp]

you should be asking your sales representative lots of questions. It can be very different then a regular listing. I have listed and sold many power of sales and one difference is neg. times. Most banks will want 48hrs in between sign backs. One bank i deal with is even 72hrs. That leaves a lot of time open for other offers. Talk with your sales rep. they will help you answer all your questions.

 

[Alderbrook]

Agree with what everyone has said here. GET A HOME INSPECTION. The bank backs nothing. they won't even guarentee that there is no UFFI. You can also only negotiate during bank hours. Also banks are slow at negotiating. Don't think you're getting a deal because it's power of sale. If fair market value is say $500,000, the bank will try to get that. If the outstanding mortgage was say $100,000 it doesn't matter to them. The terms that the previous owner signed said the bank was obligated to get that value & not undersell it just to get their portion of it.

Have patience & make sure it's worth while if it needs a lot of work.

The cost to upgrade to gas is a lot of money. A furnace has to be installed. Gas line run into the house. Duct work run all thru the house. Have a furnace company come in & give you a quote to find out the cost before you buy it if you can.

 

[FayeW]

The common misconception about power of sales are that they sell for below market value. The person/bank holding the mortgage is obligated to get market value for the property. So it is not necessarily a deal over a house that is not power of sale. Further, power of sales tend to come with no warranties at all, so if there is something wrong with the house you have little recourse.

If you have further questions you can send me a PM or post them here. Good luck!

Yes, many people confuse Foreclosure and Power of Sales. With a Power of Sale, the creditor is obligated to try to get fair market value for the property, and any surplus that remains after the mortgage/fees etc are paid is given back to the debtor. If the property sells for less than the sum of the mortgage and related fees, then the debtor can be held responsible for the shortfall.

With a foreclosure, however, once the creditor takes ownership of the property, they have absolved the debtor of any further responsibility. If the creditor chooses to sell the property, they retain any surplus cash from the sale. By the same token, if they sell for less than was owed to them, they cannot pursue the previous owners for the shortfall.

 

[KerriMc]

We have someone going in with my husband tomorrow to give us a quote on all work that needs to be done ... we would prefer natural gas, so that will be the big one. Then we need all new flooring (some hardwood just needs to be refinished), the upstairs bathroom needs to be gutted as they had apparently already started this process and didn't finish. We did find some mould in the closet that backs onto the bathtub in this bathroom (along the baseboard) so I'm not sure if there is a big problem or just a small one.

Right now the house is listed at 259,000 which in the area it is in in low. You could expect to pay around 350 for a house like this in good shape. So we need to know firstly if there are any problems and if it is worth all the work we would need to put into it.

It is listed as is ... and it most definitely needs work. Can't see it in the pics they have taken though (not much anyways) ... it is MLS#092238 if you want to look

Getting kind of worried about the whole buying and selling process. We are about to list our house and I don't know if I'm entirely ready or if I'm just havig cold feet!!!

 

[cabmom]

Looks like a great place that needs some TLC.
Make sure it wasn't a grow op!
My sister lives not too far from there.
It cost us $6500 to convert from oil to gas and adding AC.
Does the house have the venting for gas?

 

[Chickkypoo]

We bid on a Power of Sale this past summer. We had no conditions on our offer, we were going in cash, no home inspection.

We had the highest offer out of all of the offers by $4,000, but it was rejected as we wanted to make sure everything from my fiance's house sale went thru first, so we gave them a closing date of 3 weeks later. The bank went with an offer with a sooner closing date.

 

[KerriMc]

It wasn't a grow op At least I dont' believe it was ... they have to disclose anyways, but there isn't the humidity in the house to see that. It was a foreclosure due to not paying the mortgage. Usually grow ops are quite lucrative and have no problems doing that

It doesn't have the venting or ductwork for the gas so that will cost a lot to do with two stories I would think. We also would have to get the gas line into the house too seeing as they have never had it.

The fellow bowed out on coming to see the house tonight at the last minute so we are going to see if the fellows we used to finish the basement in our current house are able to look at it on thursday and then we'll go from there.

 

[stefanospops]

Have you considered going with a radiant heat system instead of ducts? I see the house has electric baseboard heaters which are more expensive to operate. But rather than giving up ceiling space to duct work you could always look at a radiant floor powered by gas throughout the house. Bascially, your floors will be heated and act as one great big radiator. Then you don't have to worry about running ducts throughout and your energy bills will be much less in the winter. Also, any radiant heat is more comfortable than forced air gas since those systems operate by removing moisture from the air. This is why houses get so dry in the winter when the furnaces are running.

You can then add a separate air conditioner unit in the attic. They basically run the ducts in the attic as well and put small holes in the ceiling. They can do it in two storey homes as well. This is also the most efficient way to cool a house in the summer, from the top down.

Both systems are more costly to install but less costly to operate. But since you have no ducts to begin with they may be closer in price. Just a suggestion. Good luck!

 

[KerriMc]

Well we put an offer in on the house today!! We got a good quote for the work so we think it is worth it to do ... there is another offer but don't know what it is. I am sure hoping that this all works out for us. I will be sooooo disappointed if it doesn't!!!!

We've decided to go with the natural gas. I just prefer it. I want a gas fireplace as well so have to have the gas anyways. We are also going to take the small fourth bedroom that doesn't have a closet and take out the wall b/w another bedroom and make that into our master and add a small ensuite as it will back onto the other bathroom so plumbing is already in place. Now to figure out the laundry part. Was hoping to do have it main floor or upstairs but there just isn't a spot that I can figure out! Darn it ... a basement laundry room again ... oh well ... need the exercise I suppose

Kerri

 

[cabmom]

Excellent!
Hope everything works out!

Is your dh an OPP?

 

[DisneySouvenir]

I would make sure you have a separate pool inspection from a company that does that specifically. I just bought a home and the home inspector looked at it, they quoted me about 2500 to fixall issues in the home, and it ended up closer to 25,000.

They are general inspectors and most dont have expertise on heating systems for pool , ceramic tile inserts, solar panel heating and pool filtration systems.

 

[KerriMc]

Well we didn't get it They accepted the other offer (was higher than ours) even though they had conditions on the sale of their home. It isn't totally 'dead' as they have to sell their house by this Friday, so if that doesn't happen it will be opened up again. If so we are going to put in a higher offer and hope that it gets it for us. I was so disappointed as it is the only house I've actually "felt" that good feeling about. So here is to hoping the other people don't sell their house (that sounds so terrible!!).

There isn't a pool, so we don't have to worry about having that inspected.

Cabmom ... yes my dh is an OPP!

 

[crash2000]

and on a side note, a freind of mine bought a power of sale and it turned into a nighmare, as the house was part of a death settlement thingy ( whatever thats called) they finally got the empty home almost 30 days after there closing date due to some legal issues with the will.

 

[KerriMc]

Well it all turned around!!! We have had our second offer accepted!! So now on to the financing and to see if we can swing it as I doubt our house will sell in time before we take possession ... don't know if we can do it!

Thanks for everyone's help

Kerri

 

[cabmom]

Yay!