Bad Deal of the Month
I wanted to send along this message to use as a case study on Buying a Power of Sale property in Durham Region. This was a text book example of why you need to have good research done before you buy.
It’s ok to walk away from a property if the deal is bad.
I see a big part of my role as the voice in your head that says “maybe this is not the best fit for you”
Why would you pay current turn key market value for a property in poor shape needing tens of thousands of dollars of renovations?
Bad Deal of the Month:
I had the opportunity of pre-viewing a property for a client recently. This was a power of sale property. 3 Bedroom multi level detached with 1.5 car garage and unfinished basement.
The lender needed at least 930k from the sale apparently. This property had 3 failed transactions (deals fell through after posted as sold, not in conditional period) in recent times for mid 900k.
The property:
- Main floor laminate old and cheap, tile outdated
- Furnace was not functioning properly, possible replacement needed
- Kitchen was original with laminate countertops
- Kitchen back splash was gross, needed replacement
- Overhead fan was in need of replacement
- Appliances were sold as is.
- Unfinished basement
- New carpets needed upstairs
- Bathrooms were original
- Roof shingles were mid lifespan at best
- On and on
How much do you think Renovations would cost to make this property up to the level of the below comparisons?
Remember: Power of Sale means that you have No recourse if defects are found in the property… You are buying As Is. You can do a pre-inspection however if you purchase there is no due diligence period for finance, inspection or other reasons. You are buying with no safety net.
Comparable properties:
Similar properties with non finished basements: Average recent sold values from 770k (original fixtures) to 940k (recent renovations)
Finished Basement comparable properties: Average recent sold values from 850k to 950k.
New builds (under 1 year) values 1m to 1.2m
What did the Example property sell for? $950,000
Why?
Desperate buyer, had no choice in the market and needed to make an immediate move. (nonsense as there are a ton of properties on the market at the moment)
Poorly educated buyer. Did not have a good view of the local market and agent did not provide good information.
Contractor buyer. Can do the renovations themselves. Honestly there are better Reno properties at better prices than the above example.
Seller (Finance Company) would not budge on price. (see above 2 reasons)
You need an agent that is looking out for your best interest… Period.
Contact me directly and I can show you the real photos and you can draw your own conclusion.