There is a misunderstanding about properties being sold under “Power of Sale”.  The general comment is that “properties can be purchased for well below market value”.  Related to other similar neighbouring properties this could be true, but there is more to it.

The fact is that when a mortgagee sells the property under the Mortgage Act and related mortgage documents they are acting as “trustee” for all interests involved with the property including their own.  The mortgagee usually obtains appraisals to get independent professional opinions as to the value and marketability of the property.

Since the owner or mortgagors of the property were not able to make the mortgage payments they were also probably not able to upkeep the property and may have deferred or not address  many regular maintenance items of the property.  The property may be in a “poor” condition.

Roofing  might require replacement, flooring may require replacement, mechanical  systems require updating, kitchen or bathrooms are dated  etc.  Did the property sell for below market value?  No!  The property sold for “market value” in relation to other comparable properties that were better maintained.  The mortgagee is obligated to sell the property for market value.

Advanced Real Services Ltd. has extensive experience completing appraisals of properties being sold by mortgagees under “Power of Sale”.