Power of sale (aka POS) is a process that sees a home go up for sale after the homeowner is unable (or unwilling) to pay for it. Right now, there are a handful of properties available for sale in Etobicoke under POS and buyers are taking notice.
That said, because they’re not the most common type of listing, POS homes can come with their fair share of misconceptions. So how are POS homes different from a traditional sale, and what do you need to know as a house hunter?
I’ll break it down in this blog post.
What is Power of Sale?
First things first, let’s go over what power of sale actually is and how it impacts homeowners.
When a homeowner can’t pay back their mortgage or falls too far behind on payment, the lender can evoke the power of sale. When this happens, they earn the legal right to sell the home in order to recuperate the money owed to them. Once the home sells and all debt is paid off (including interest and closing costs), any leftover proceeds will be passed on to the homeowner.
When a home is sold under POS, it’s listed on the market just like any other property. In some circumstances, the real estate agent hired by the lender may specifically advertise the home as a POS property, but not always.
POS is occasionally confused with foreclosure, which is slightly different. In a foreclosure situation, the bank takes full ownership of the home and sells it. They get to keep all of the proceeds from the sale even if it exceeds the debt owed.
Buying a home for the first time? Check out these related resources from my blog!
- Buying a House Under $1 Million in Etobicoke? Here’s What to Expect
- Getting to Know Etobicoke’s Starter Homes
- Why You Should Consider Buying a Home in South Etobicoke
The Stigma of Power of Sale Homes
When a home is sold under non-traditional circumstances it may be referred to by some as a “distressed property” and as you may expect, this designation can evoke mixed emotions, stigmas, and misconceptions.
Occasionally, buyers may feel guilty or hesitant about buying a home under power of sale given the circumstances that led to it being on the market. However, it’s important to look at POS homes just like any other for-sale property.
While it’s completely normal to feel bad when someone has been asked to leave their home, it’s important to keep a realistic perspective and not feel overly sympathetic. POS sales are common, and they only happen once the homeowner has received (and not resolved) multiple notices or warnings from their lender. Yes, it’s ok to have empathy, but as the buyer, you really only need to worry about whether or not the home itself suits your needs.
How is a Power of Sale Purchase Different?
From a buyer’s standpoint, there’s not much difference between buying a home under power of sale versus one that isn’t. There’s a common misconception that buying a POS home is cheaper than buying a home that’s not being sold by the bank – this isn’t the case. At the end of the day, banks are looking to recoup their losses from the mortgage, so they won’t be cutting corners on price for the sake of getting the sale over and done with.
However, the negotiation process and the finer details of your sale agreement can look a little different depending on the unique circumstances of the home itself. For example, if the house is already vacant, you could be able to take possession sooner than you would in a traditional home sale.
Want to buy a home in Etobicoke? Regardless of price point, you’ll want to know a few things before heading to the market. Read these blogs to learn more.
- How Much Does It Cost to Buy a House in South Etobicoke?
- Buying an Etobicoke Bungalow (And its Potential)
- What to Expect When Moving From a Condo to a House
What Power of Sale Homes Are Currently Available in Etobicoke?
There are currently a few homes listed for sale in Etobicoke that are on the market under power of sale. If you’re interested in receiving these listings, please email me at melissa@southetobicoke.com
Guiding Your Home Purchase
Whether you’re looking to specifically buy a Power of Sale home or any other type of home, you’ll want to work with an experienced local real estate agent. That’s where I come in.
As a proudly local South Etobicoke agent, I know our unique market inside and out. I have the connections, insights, and inside scoop to help you find (and buy) a great home on your budget.
Looking to buy a home in Etobicoke? I can help! Call or text me at 647-239-7587 or send me an email at melissa@southetobicoke.com to get started.
Want to know how much homes in South Etobicoke are selling for?
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