Sometimes foreclosures are smoking hot deals and sometimes…well…they’re not. Before you buy a foreclosure in Calgary, you should consider some of the hidden costs associated with a foreclosure. Because all you get with most foreclosures in Calgary is title to the property, you miss out on a lot of chattels. ( See my blog on foreclosure chattels here. ) Even if you’re getting one heck of a steal, there are certainly some extra costs to be aware of.
RPR (Real Property Report) $500-$800+?
This report is transferred as a part of any regular sale, unless it is intentionally scratched out of the regular AREA (Alberta Real Estate Association) Offer to Purchase. The cost for the document itself is usually $500-$800, however, you need a stamp of compliance. If your property somehow is not compliant, you need to count the costs of making it comply. This amount can range from very small to very large.
Condominium documents $300-$700
These too are transferred with a regular sale, with only a few exceptions. Replacing them requires a bit of effort and certainly some cost.
Keys and Access $50-$250
Typically, you are given one key to access the property. You will (in most cases) not be given garage door openers, FOBs for condos, mailbox keys or any other implement meant to access your purchase except through the front door. Replacing all of these takes time and money.
Some foreclosures come with appliances, some don’t. Either way, they’re not guaranteed in the contract, and whether or not they function is not the problem of the bank. It’s your risk. Which brings me to…
No Warranties and Representations $0-?
This means you accept the property “as is, where is.” The bank doesn’t guarantee you anything about the property, except that you can have it clear title. Anything in the property that is broken, contaminated, or not to code, is your responsibility to remedy. Not the bank’s. Although a property inspection can help us to identify problems before we choose to buy, it’s not 100% fool-proof because an inspector can’t see through walls, roofs and floors.
Buying a foreclosure can be a great deal at times, but make sure you count the extra costs of buying a foreclosure with all of its hidden costs, and a private sale, where in most cases you don’t have a lot of hidden costs.
The Vanderveen Team
Maxwell South Star Realty
Phone: 403.253.5678 Fax: 403.592.6736