I often get asked about Foreclosure properties (Power of Sales). When a home is being foreclosed or sold by power of sale, it means that the lender (mortgagee – ie. a bank), not the homeowner (mortgagor), is selling the property. It is the process that allows the lender to recoup the funds when the homeowner has not paid the mortgage (default on the mortgage).
When it comes to power of sale properties, they may seem like a great deal but in fact, they’re being sold for what they’re worth and not under market value. The lender must sell the property for the highest price possible with any proceeds coming out of the sale going towards paying off the remainder of the loan and any interest arrears or commissions associated with the default. If there are any funds leftover, they go back to the homeowner as title still remains with them. Power of sale properties still have to be listed on the MLS system and appraised by accredited appraisal professionals.
But wait! Now that you’ve come to an agreement with the bank, you still might not get the house. The homeowner can still take their house back if they get their mortgage back into good standing before closing.