Every so often I get a question about foreclosures from someone either buying their first place or looking to get into real estate investing. The inquiry goes something like this: “I have access to funds. Can you find me an amazing deal? What about bank foreclosures in Toronto?” Let me start by saying I don’t necessarily blame them for thinking that foreclosures are a great place to start investing. There have always been those that advertise “We have access to bank foreclosures!” or the get-rich-quick radio ads claiming that all you need to do is attend a free seminar to get the info that “no one else has’ even though thousands attend these events only to spend money needlessly. Let me help debunk this myth by first saying…
We’re in Canada!
Unlike the US, we weren’t “that” affected by the subprime mortgage crisis of 2007-2008. This was a point in time for our Southern neighbours’ history in which the banks were inundated with properties that owners could no longer afford. House prices dropped by 30% in some cases which made property values worth less than the loans used to purchase them. Banks had to price these homes at low levels in order to help with the debt. Due to our strict mortgage rules, thank goodness, this did not happen up here. Speaking specifically about Toronto and the surrounding area every once in a while there will be someone that cannot afford their property any longer and the bank will sell the property as a foreclosure.
Aha! So foreclosures do exist!
Well yes, but they exist in such low numbers that waiting around for a foreclosure can be an exercise in futility. Banks, as an obligation to their shareholders, will want to sell the house for the maximum value. If you’ve been paying attention to the market you know that houses that are priced fairly rarely last long on the market and the banks know this. They will typically list the property for market value on MLS just like anyone else. I would go far as to say that it’s probably even harder to deal with banks on the purchase as they are not desperate and the whole process gets bogged down in red tape. I’ve seen power of sale houses last on the market for months, overpriced and uncared for.
So what is everyone talking about?
Those seminars that tell you to look for foreclosures? They are usually run by reality TV stars from the USA. Listen closely to the commercials and you can tell when the “fill in the blank” city gets mentioned (“Do you want to make millions in real estate in TORONTO!“). Locally, some agents also make it a point to stress that this is one of their “specialties”. It’s a hook that may work on some to get buyers through the door who usually end up disappointed or spinning their wheels. I just can’t do it.
So can you make money in real estate?
Absolutely! First thing you’ll want to do is use a Realtor who is experienced in real estate and experienced in doing his own investing. He or she should be able to recognize a great opportunity when it comes up. By committing to a great Realtor they’ll show you loyalty and commitment in return. It’s not easy to make money in real estate, but it is easier when you have someone looking out for you.
Call Richard Robibero at 416-277-8025 to help you find a home that has the greatest potential to raise in value based on house type, location, and negotiating a great deal on your behalf. Richard has 20 years of personal investment experience behind him. “I do as I say!”
