As I explain in great detail during the following video, I can’t stand the growing sentiment in the market place that “all foreclosures are great deals.”
Do you know what a “foreclosure” is in Toronto?
It’s a house that is falling apart, and is offered for sale at 15% above market value by the bank…
What more can I say?
I think I’ve summed it up rather nicely in this video, as I huff and puff from climbing two sets of stairs and clearly demonstrate that despite my penchant for the hitting the gym five times per week, I’m completely unable to talk, film, and climb stairs without losing my breath…
Anyways…
In early 2009, I was working with an out-of-town buyer who was looking to invest in Toronto. His price range was a tough one – $200,000, but we found him a condominium townhouse on Victoria Park Avenue that would have generated an incredible 6% cap rate which is unheard of for a condo.
But he was obsessed with this idea of looking for “foreclosures” because he assumed that any property which had been foreclosed on would be available for far under market value.
He wanted to offer $140,000 on this $215,000 condo (reduced from $245,000), at which point I realized he was insane…
He refused to look at anything that didn’t have “POA” or “BANK OF XYZ” listed as the seller, and eventually he faded from my life as he was only interested in picking up a property for pennies on the dollar, which just doesn’t happen in Toronto.
This isn’t Phoenix, folks!
Even when our market was “weak,” you didn’t see people picking up $800,000 houses for $410,000.
“Foreclosure” does not mean “Great deal!” And in Toronto, chances are excellent that the property is overpriced to begin with…
LC
at 10:48 am
I truly believe that HGTV played a big part in decimating the US housing sector. I watched some of those shows and they just made no sense. But yes, you can make money on a foreclosed homes IF you buy it well below market value AND you know what you’re doing. Fail one of those two conditions and you are essentially begging for financial ruin.
Aguduser
at 11:23 am
A friend of mine rented an apartment in a house near downtown, only to learned a month later that the house became a foreclosure property! He still lives in the apartment, and is now paying rents directly to the bank. And the bank is preparing for a power of sale.
What’s interesting is by talking to the listing agent and the appraiser hired by the bank, he learned that the house was sold about $110K overpriced a year ago, and the whole thing might have just been a fraud, and that it looks like the bank would never be able to recoup the loss. The question is: what price will the bank list this property at in this situation?
DEW
at 4:32 pm
There ARE websites that advertise Toronto foreclosures and despite what you may think or know, these are in large supply. Trust companies usually offer foreclosures at more competitive prices than the banks, FYI.
Meany
at 2:17 am
Dude, you gotta work out more.
earth mother
at 11:25 am
Omigod — how can one property have so many deficiencies?? and a worse thought: did people live in this house??