I am surprised the number of clients that have approached me with what they think is the greatest deal in all of real estate - the power of sale property!
While these properties can often be purchased at a bargain, and several have yielded a good profit for their owner, one needs to recognize that power of sale properties are not for everyone. Let me explain.
The first thing to know is that the house will likely be in need of renovation. The walls, flooring, maybe even the electrical or plumbing and yard, will need some work. You can benefit most from a power of sale property if you willing to do the renovations yourself.
Another thing to know is that power of sale properties are sold "as is". There is no negotiation, 'what you see is what you get'. Also, the seller will not make any guarantee as to the chattels or fixtures, which means the window coverings, the shelves in the garage, even the appliances are not guaranteed in the sale.
Also consider that the sellers will reserve the right to postpone your closing up to 60 days with little notice. For example, if Ted's power of sale was closing on October 1st, on September 31st he could find out that the closing has been pushed to November 1st. Even after Ted moves in, he is not guaranteed, for example, the appliances. The previous owner has a specific period of time to attempt to reclaim those possessions.
All of these "non-guarantees" on a legal level, are to allow default time to the owner to come up with the money to reclaim lost assets. Banks and other lending institutions will not make improvements to a property that may revert back to the original owner. So, if you are considering a power of sale you must take into account the additional expenses (renovations, possibly appliances and potential rental costs). Since the closing can be pushed ahead, not everyone is able to take advantage of power of sale properties.
In my 25+ years of being in the real estate business, I have not seen appliances seized, closings pushed ahead, or a buyer dissatisfied with a power of sale. However, even with thorough research, the fact remains that problems, although unlikely, can still occur.
If you would like more information on power of sale properties, you can contact me at email@example.com