How to Buy Foreclosure Properties Without Losing Your Shirt!

losing your shirt buying foreclosed propertyAll those reality TV have shown how you can make a quick buck by buying foreclosed properties.  Just remember, what you see on TV is not always what happens in real life, even if it is “Reality TV”!

Few key things to keep in mind so that you don’t end up losing your own house when chasing after a good deal on foreclosed properties.

For folks who don’t know the foreclosure process, here’s how it works in a nutshell:

There are two different procedures that dictate how foreclosures are processed in Canada.  Judicial Sale refers to the procedure where the lender must petition the court for permission to sell property that is in default.  BC, Alberta, Saskatchewan, Manitoba and Quebec follow this procedure.  Newfoundland, Ontario, New Brunswick and P.E.I follow the Power of Sale procedure.  In this situation, the lender can sell the property without permission from the court as dictated by the terms of the mortgage.

When you buy a foreclosed property you are almost always dealing with the bank rather than the home owner.  Banks are generally unwilling to budge on price or conditions of sale.  Where a seller might negotiate price or contribute to closing costs, a lender is just looking to get their money back with the least hassle. This could prove to be a deal breaker if you do not have the asking price readily available.

How does the process work?  Well you better know before you jump in with both feet.

Here’s a summary of how to buy a foreclosed property:

  1. Submit an offer to the owner (bank is the owner if property is in foreclosure) or realtor representing the owner

  2. Once your offer is accepted, you can get financing and inspection done

  3. Remove your subjects and conditions afterwards and give deposit to the realtor

  4. Once the bank accepts the offer, they will request a court date (takes 2-4 weeks)

  5. Anyone else can view your offer during this wait time

  6. If anyone likes the property, they can come to the court on that date to make their offer as well.

  7. If nobody makes another offer on that court date, then the judge can approve the sale

  8. If someone else shows up, they can all make an offer (most likely higher than yours). You can make a final offer to increase your chance of success at this time.  However, anyone that makes an offer at this stage cannot have any conditions such as financing or inspection etc.

  9. All offers will be given in sealed envelope and the judge can make the final decision based on a few variables such as 1) price 2) completion date and 3) deposit amount

  10. The judge will make the decision based on those 3 factors

Warning: the highest bidder may NOT always win.

I have had investors that had offered less than the highest bidder and won.

How could that be? 

Well, you have to understand what the situation that the bank is in during a foreclosure.  The issue is that the bank incurs expense the day they take over a property from a home owner.  They not only lose the interest earned on that mortgage but any expense incurred (property tax, utilities, insurance etc.) on daily basis is now the bank’s responsibility.

Therefore, even though a bidder may offer less than their competitor but the completion date is much shorter than the highest bidder, the judge may look at that offer as being more favorable than someone who cannot take possession for 3+ monthes in the future.

Understanding this fact alone could give you leverage.  Armed with the right information and team at your disposal, you might be able to win yourself a good deal.

Here’s a few tip that has helped some investors win on a foreclosure:

  1. Know Your Limit and Stick With it

  2. Build a Power Team

  3. Run the Numbers

  4. Ready Those Ducks

  5. Bidding Wars?

Know Your Limit

If you have X amount of funds available, keep your offer within the budget or you may end up putting yourself into financial jeopardy.

An epic failure is overpaying for a rundown property that you have to spend time to fix in order to sell just to get your money back.

Set a budget and stick to it!

Build a Power Team

Do you have all the people you need on your team to accomplish this venture?  Make sure you have some if not all of the following players on your team:

  1. realtor that intimately understand the process (they’ll be more patient with you). Are they also an investor that owns rental properties?

  2. solicitor that specializes in real estate law and confirm they have time for you (end of month is extremely busy for some which may charge rush fees)

  3. mortgage broker that understands the process and short time required (does he/she know how to underwrite your deal rather than wait for a bank to approve the loan?)

  4. general contractors – have reliable partners to give you quotes and affordable tradespeople to help you get the job done in timely fashion

  5. reliable inspector – check for surprises that can end up costing you much more than you or your contractor had estimated

Run the Numbers

Get a good spreadsheet with all the variables for renovation and rehabilitation cost on a property before going after it.  Will the rent service the loan afterwards or be profitable on a potential fix/flip (comparing with properties sold in the area)?

Why you might ask?

Banks have an obligation to alert homeowners of a default and put the foreclosure wheels in motion.  Sometimes angry owners damage the property and often take everything that isn’t attached with them when they leave.

Most often, foreclosed properties are in poor shape.  The main reason is most homeowners who are struggling financially may have fallen behind on the home’s basic upkeep.   If they’re newer properties, it may be partially completed, and may lack appliances, fixtures and other things you’d expect to be included in a home purchase.

When you do run your numbers, you will have to consider the cost of repairs as well as purchasing all the missing items to complete the home.

Most often, these additional costs make it less appealing and unprofitable.

Be Prepared – “have all your ducks in a row”

Understand the timeline for what you need to do and when it is required.  Is your money tied up or accessible at any time?  Is additional credit or financing available to cover any unexpected costs?

This is a project and carrying costs will be involved, account for all of them in your property analysis.

Bidding Wars, Refer to Rule #1

You’re in this game to make money not to lose money.  If there are multiple investors that show up at court, make one last final bid but remember to stay under your limit.

Bidding war is like gambling.  You’re better off going to Las Vegas and have more fun losing money there instead of overpaying for a shoddy home.  Why “volunteer” your time to fix up a property just to break-even?

Don’t outbid your profit away.

Remember, there’s always another foreclosed home available tomorrow.


I believe in abundance and giving.  Please feel free to share any of my articles to your friends and family or anyone that could benefit from what I have written.  I love helping people from Surrey, Burnaby to Vancouver as a mortgage broker.  I am passionate about helping people have the upper hand when they are financing their home, business, mortgage for their investment property or commercial building.  Please leave feedback as I enjoy reading your replies as much as I write these articles.  Thank you for taking the time to read my words, I appreciate you.


Sua Truong helps alleviate stress for his clients throughout the challenging process of financing their property so that they can enjoy their life and focus on their family or their business.  His integrity is the cornerstone of what he does and why he has been so successful in such a short period of time as a mortgage broker.  In just under 5 years, he has become the #1 Mortgage Broker in his community.  He currently mentors other entrepreneurs and mortgage brokers how to stand out and be outstanding.  This way anyone can become the #1 Go-To Expert in their community.

One Comment

  1. Paul-Reply
    January 31, 2020 at 12:35 AM

    Thank you very much.
    Can i submit multiple sealed offers at the court date.
    1.5 mil 90 days completion
    1.55mil 60 day completion
    1.6 mil 30 days
    1.6 mil 21 days

    Each bid in its own sealed envelope.
    Each from same legal name.
    But creating a flexible option for judge to provide
    Time for owners. Or shortest time for the bank.
    As it may depend on the judges attitude toward owner or bank.
    Hope you have time to answer asap .
    Very appreciated.

Leave A Comment