Friday, February 9, 2024

In life, we will find ourselves at crossroads where difficult decisions must be made, even when our circumstances are less than ideal. Life’s tragedies such as sickness, a difficult divorce, or loss of employment can strike when we least expect them. They can leave us grappling with unforeseen financial challenges. Amidst the chaos, our homes become vulnerable to the power of sale process. In situations like this, you may feel too overwhelmed to make a decision. Unfortunately, taking proactive measures to protect your home is crucial – before it’s too late. 

It’s never ideal to make a big decision during a time when you are in an extreme emotional state. In a case where you aren’t making your mortgage payments, these decisions are tied to the timing of our circumstances. Although we are in our most vulnerable state and would prefer to dig our heads in the sand, NOW becomes the optimal time. 

As REALTORS®, we have helped many people in these situations. If you are entering a situation where you aren’t making mortgage payments and risk losing your home, we’d urge you to read the writing on the wall and get help immediately. By taking timely action, you can avoid a power of sale and salvage your finances.  

If you allow the power of sale process to progress without taking action, several implications can worsen your situation. Firstly, the selling price of the property is almost certainly lower than its market value, as it is often vacant and poorly maintained due to financial constraints. 

Secondly, when a home sells through the power of sale process in Canada, there are several fees and expenses that the homeowner may incur. These fees can vary depending on the specific circumstances and the terms outlined in the mortgage agreement. The homeowner may be responsible for paying the legal fees associated with the power of sale process. This includes fees for legal representation, document preparation, and court-related costs. 

If a real estate agent is involved in the sale, the homeowner may need to pay the agent’s commission fees. Before the property is listed for sale, an appraisal or valuation may be conducted to determine its market value. Sometimes, the homeowner may be responsible for addressing any necessary repairs or maintenance issues to prepare the property for sale. This can include repairs, cleaning, staging, and general upkeep expenses. The lender or selling party may need to advertise and market the property to attract potential buyers. The homeowner may be expected to contribute to these costs. If there are outstanding mortgage payments or arrears, the homeowner will be responsible for paying these amounts, including any accrued interest, as part of the power of sale process.

While this is happening, the homeowner almost always has additional high-interest credit card and line of credit fees simultaneously. You can avoid all this by proactively selling the home sooner rather than later. 

It’s difficult to face hard truths even in the best of times. When we are feeling low emotionally, it becomes that much more difficult. And yet there is hope. Clarity is power. Seeking clarity provides you with options so you can choose the best of the worst, so to speak. Whether it’s engaging with financial institutions to negotiate payment plans or considering alternative solutions like selling the property, confronting reality is the first step towards finding a resolution. If you wait, you relinquish all control and fall into even worse circumstances. 

If you are facing a situation like this – or you see the writing on the wall that something like this is ahead of you, don’t wait! Reach out to someone you trust, such as a financial advisor or a real estate professional who can guide you through the process. Contact your lender as well and explain your circumstances. If you anticipate short-term financial difficulties, you may request a temporary reprieve from mortgage payments without affecting your credit or initiating the power of sale process. Selling your home before the bank takes action can resolve many issues, and some lenders may even cooperate and delay their proceedings if they know you are actively trying to sell. If you decide to sell your property, consider pricing it slightly below market value to attract potential buyers quickly. This can help expedite the selling process and ensure you maximize the financial outcome.

You don’t have to go through this alone. If you see a power of sale looming in your future, call us. By reaching out for help early on, we can guide you through the process and explore available options together. We can help you gain clarity on your situation and options so that you can make the best decision moving forward.