Is it risky business when buying a foreclosure that’s half complete?

Some people have seen a few ‘court-ordered sales’ on homes located in the Okanagan, with the posting showing a half-finished home and the title saying ‘sold as is.’

There are two homes on Boucherie Road, in West Kelowna, that are listed but only 60 per cent complete. The sale is for the properties as-is and there are a number of conditions that buyers would have to meet to move in.

You may see foreclosures in other listings but this is different said real estate agent Drew Irvine.

“What it means is that the builder has likely run out of funding or his costs have now exceeded what the expected sale price would be,” said Irvine.

A court order sale is a different type of sale from a normal transaction. Court order sales are risky and take longer than a typical home sale, Irvine said.

Irvine said it’s important to prepare yourself and do the necessary research if it is something you are interested in.

“As a consumer, you would obviously want to engage a realtor that would ensure that the contract is subject to financing, home inspection, insurance and legal advice,” said Irvine.

“You would have to have a contractor come in and give you an estimate of the cost to finish the home. I’d even build in a contingency there of another 20 per cent for surprises.”

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There are many factors at play: if a buyer likes a foreclosure they can submit a standard offer, but foreclosures are most often subject to a court date. This is when a judge will decide on which bid will be accepted. As well, on the court date, any person interested in the same property can show up and add a competing offer.

“So if there is no court date set, you can bid whatever you want to. But if it’s still listed and there is that first accepted offer, and the court date is set you couldn’t bid lower,” said Kelowna Mortgage broker, Michelle Scheibel.

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Kelowna Mortgage Broker Michelle Scheibel, says it is rare to find a home that is only 60 per cent complete. Not only that but often it would be tough to secure a loan or mortgage from a bank, as lenders prefer a home to be at least 97 to 98 per cent complete.

“The reason why, is if they got stuck with that property – the client couldn’t pay for the mortgage for some reason – and the (lenders) are stuck in a foreclosure situation trying to sell that property, it would be very difficult,” said Scheibel.

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Scheibel said homes like these are often scooped up by other contractors. She said it’s not an ideal purchase for a first-time home buyer as there are many hurdles and complications that could get in the way.