What does the term" Power of Sale" mean? As a homebuyer in today's marketplace, understanding the meaning and implications of a Power of Sale are absolutely essential. A Power of Sale listing occurs when the previous owner defaults on their mortgage, and literally walks away from their home and their financial obligation. The mortgage lender usually a bank or financial institution then holds the Power of Sale. Their goal is to recover the money still outstanding on their original mortgage loan. In times gone by, when home prices were on the rise, buying a home through a Power of Sale could often be a bargain. Since the lending institution's primary goal was to recover only the money owing, without having to carry the home's expenses for a prolonged period, these properties would frequently be sold below market value. However, in today's market, the term Power of Sale is no longer synonomous with "bargain". In fact, the situation today can vary according to markets, or neighbourhoods, or even house to house. In cases where home prices have dropped significantly from the original purchase price, some owners have chosen to walk away from their oversized mortgage balances. These mortgage balances are sometimes well beyond the current market value of the home. Also, if the previous owner was in dire straits financially, there is a very good chance that the property has not been well maintained. That can add up to significant after-sale expenses. If you have an opportunity to buy through a Power of Sale, talk to someone with your best interests at heart. Your real estate salesperson is a valuable source of information on current area market value trends. A Power of Sale may still be the right choice for you. Just make sure that you listen to the advice of your real estate expert before making your offer
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