Homes Under Power Of Sale

A power of sale home is one that is being sold by lenders such as banks or mortgage companies. These homes are being sold due to the borrower failing to fulfill their payments to the lender. Power of sale homes may be opportunities for homebuyers to purchase properties for a lower price. These homes however come with risks and require careful consideration. Lenders often prefer power of sale homes over foreclosure due to its fast process, less court time, and lower legal costs.

Pros

    Power of sale homes sell for lower because lenders typically try to sell these types of homes as quickly as possible to make up for the loss from unpaid dues of the borrower. Power of sale homes are put on the market for as-is conditions. Buyers have the power and responsibility to make any repairs and renovations on the property and update it as they like. This is great for buyers who are looking to buy fixer upper properties. 

Cons

    On the other hand, power of sale homes do have risks when buying. Since the homes are sold as is by lenders, any issues and damages on the property may not be fully identified before being put on the market. For this reason, buyers will have to conduct their own inspection of the property. In addition, the previous owner of the home may have left some of their belongings which brings additional effort to have removed. On top of that, the property may also have liens and unpaid bills on the property that buyers will have to take responsibility of. 

How does it work?

    The process begins when a lender sends notice of default to a homeowner that fails to meet mortgage dues. Lenders provide homeowners a certain timeframe in which they can make up for the missed payments. If homeowners fail to make payments within said timeframe, the lenders can proceed to initiating a power of sale.