When considering a purchase on a home that is currently in foreclosure there are some points that are important to understand.
As a purchaser you can make an offer on a foreclosed property and have the bank accept it subject to financing, inspection, insurance, home inspection and any other pertinent clauses. Once all the conditions have been met a court date is triggered. The accepted offer price is now public knowledge and anyone willing to pay more for the property has the opportunity to present their unconditional offer along with deposit to the court. This means that they must either be an all cash buyer or have all the financing 100% approved and ready to be released. At the court competing bids are common.
If you are interested in a property where a court date has already been triggered you must consider that an offer submitted to the court has to be unconditional, if you would like a home inspection you must have it done prior to presenting the offer. Same with financing the source of your funds must be cash or have your mortgage specialist have the property and you 100% approved. This is not a pre-approval this means that your broker has submitted the property, schedule A to the lender and has given you the clear ok to present an offer in court with a deposit of more than $10,000 already in trust with your realtor. Your broker needs to know that you are looking at going to court with your offer and financing. Your deposit can be compromised if this is not taken very seriously.
In competing bid situations, the principal objective of the Court is to protect the interests of the owner of the property being sold. The Court has few, if any, concerns about competing bidders, lawyers, realtors and others. The Court attempts to ensure that the best (normally: highest) offer is approved. That is done by allowing all competing bidders (including the bidder whose offer is already before the Court) to submit one final sealed bid. The Court opens and reviews all the bids together and approves the best one. Once the bids are opened by the Court they cannot be changed in any way; the auction process is completely final.
The Court will not approve any offer with a “subject” (a purchaser’s condition precedent). The only acceptable (and mandatory) “subject” is a vendor’s condition precedent that the offer is subject to Court approval.
The Court will not approve any offer without a significant and real deposit (i.e. – a minimum of $10,000, either already deposited in a realtor’s or lawyer’s trust account, or a bank draft or certified cheque attached to the offer).
The Court will not approve any offer without the full and proper legal name(s) of the purchaser(s) (exactly as such name(s) will appear will appear in title if that offer is successful bid). So an offer with the words “or nominee” or anything similar would not be approved. Once an offer is approved, the name(s) cannot be changed in any way.
Current Foreclosures
All offers presented to the Court must have a schedule “A” attached and signed by the offeror(s). Offers without this Schedule will not be acceptable to our client (and therefore also not acceptable to the Court, because our client is the vendor).