Foreclosures have been extremely popular for several years in Quebec, particularly with the rise in popularity of real estate FLIPS as well. Many investors are asking questions and want to know exactly how repossessions work. Let us tell you that it can be very interesting, but you have to exercise diligence. 

In this section, you will find some of the most popular and commonly asked questions about repossessions in Quebec. If you would like assistance from a broker, fill out our free form below!

Are all foreclosed properties for sale good deals?

 No. In fact, you have to be careful when buying a foreclosed property. Too many buyers believe that they are all bargains and that the banks are selling them below market value. Know that not all of these offers are worth it.  Sometimes, the selling price given by the bank is based on the fair market value of the property. Most often than not, foreclosed properties are in poor condition or require work. Some financial institutions adjust the selling price to take into account the absence of legal warranty which can mean that you will pay 8-10% below the normal market value. This price reduction is justified, and if you sell it in the future, you too will have to resell it 8-10% below its normal market value due to the absence of legal warranty. You must therefore make sure that you have a “deal” in your hands when you consider buying a foreclosed property.

Why are foreclosed properties cheaper?

 As we just explained, banks sell foreclosed properties for a little less than their market value for different reasons. Here are the 3 major reasons: 

• The property is often in poor condition or requires renovations. The sale price will therefore take into account the budget required to renovate or repair the property.
• These properties “sold without a legal warranty at the risk and peril of the buyer” which means that you will have no recourse against the bank in the event of hidden defects or problems. This clause generally lowers the value of a property.

• Time is crucial for banks. They want to sell fast and get their money back as quickly as possible. To achieve this, they will then often lower the selling price a little below the market value in order to attract buyers and to make a quick sale.

Who is in charge of selling foreclosures in Quebec?

In Quebec, banks and financial institutions entrust to real estate brokers the task of selling houses, condos, semi-detached and other properties they have repossessed.  Brokers are in charge of selling the properties currently held by the banks.

If you wish to see a foreclosed property, you will do it with a broker. He represents the interests of the bank, and any request for negotiation on your part will be transmitted to the bank through him. It may be an agent from Remax, Via Capitale, Royal Lepage, etc., who takes care of the sale. Some agencies and brokers specialize exclusively in the sale of repossessed properties.

How do purchase offers work for a foreclosed property? 

If you are interested in buying a foreclosed property, you will need to make a traditional purchase offer submitted to the real estate broker in charge of the property. The difference with normal properties is that in this type of transaction, brokers often ask for deposits or down payments of around $5,000 or a certain percentage of the sale price to validate that you are serious. Be sure to ask the broker about the terms and conditions of purchase offers before sending one.

It is best to find your own real estate broker to represent you in this transaction to protect your interests and help you to negotiate the sale.

If you want to know how much you need to buy a house, consult our article on Closing costs for buying a house in Quebec.