Buying Power of Sale and Bank Sale Homes in Brampton
Opportunity, with different rules
A power of sale is a home sold by the lender after the owner defaults on the mortgage. In Ontario this is how most “bank sales” happen; true foreclosures are rare. These homes can be good value, but the process is different from a normal purchase, and the risks sit with the buyer.
How a power of sale purchase is different
- Sold “as is, where is”. The lender has never lived in the home and gives no warranties about its condition.
- A lender’s schedule is attached to the agreement. It usually limits what the lender promises and lets it change the closing date.
- The owner can still redeem. Until closing, the original owner may pay off the mortgage and cancel your deal.
- Possession can be complicated if the home is occupied, or if chattels and fixtures have been removed.
- Price isn’t automatically a bargain. Lenders must take reasonable steps to get fair market value.
How I protect you
1Price it from real comparables.
Not from the “power of sale” label. Some are well priced; others are listed at full market value.
2Inspect before you commit.
Where possible, we make the offer conditional on inspection, or inspect before the offer.
3Have your lawyer read the lender’s schedule.
Before you sign. It decides your rights more than the standard form does.
4Plan for the unexpected.
Budget for repairs, cleaning and missing appliances, and keep your financing flexible on the closing date.
Questions people ask
Are power of sale homes cheaper in Ontario?
Not always. Lenders in Ontario must take reasonable care to obtain fair market value, so many power of sale homes are listed near market price. Value comes from homes that need work or have been on the market for a while.
Can I get a home inspection on a power of sale property?
Often yes, either before the offer or as a condition, although lenders may push for firm offers. Sandeep Pawar recommends an inspection on every power of sale purchase.
What is the difference between power of sale and foreclosure?
In a power of sale the lender sells the home and the owner is entitled to any surplus after the debt is paid. In a foreclosure, which is rare in Ontario, the lender takes ownership through the court.
Selling, buying, or just thinking about it?
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Sandeep Pawar, Broker · RE/MAX Gold Realty Inc., Brokerage · 2720 North Park Drive, Suite 201, Brampton, ON L6S 0E9 · All offices