Foreclosure vs Power Of Sale
I want to talk a little bit about the difference between foreclosed homes and power of sale actions. A bank has several options. They can foreclose your house. This is where they take the title to your house. You will then have no rights whatsoever. Once they have your property they can sell it for whatever they want even if its 20 cents on the dollar. This is very uncommon in the Ottawa area as it can take up to a year to get though everything in the courts.
Banks would prefer to go through the power of sale provision in your mortgage which allows them to take possession of your home and evict you. They however cannot take your equity. They do have to put it up for sale at fair market value and return any money to you after they pay off any mortgage that you owe. Banks have to be very careful when they do these properties. They have to get several independent appraisals and make sre the property is listed properly through a realtor and is marketed to the full extent to get the maximum price they can otherwise they can end up in court with the previous owner. This means they will not be as low as the foreclosure prices that you see in the States but they are sold competitively and must be sold.
They are often not sold in the best of shape but sold as-is where-is. Sometimes the lower prices you see simply reflect the condition that they are in.