Do you want content like this delivered to your inbox?

The Pros and Cons of Buying a Foreclosed Home in Canada


After becoming a Realtor® in 2002, AJ Hazzi noticed a gap in the real estate market...

After becoming a Realtor® in 2002, AJ Hazzi noticed a gap in the real estate market...

Jun 30 6 minutes read

A foreclosed home is a home that has gone through foreclosure. Foreclosure is the legal process in which a lender repossesses a property from someone who has defaulted on their loan, usually by failing to make their mortgage payments for an extended period of time. You can then buy the foreclosed property from the lender—sometimes at a discount.

There is some risk in purchasing a foreclosed property, however; check out the following pros and cons to decide if it’s worth the potential reward for you.

Pro: lower price

Foreclosed properties are not as common here in Canada as they are in the U.S.—and generally speaking, foreclosed homes here are sold at closer to market value than they are down south. If you’re expecting the extremely cheap prices of the foreclosed homes on U.S. renovation shows, you simply won’t find them here. However, foreclosures are typically lower priced than their conventional counterparts, and here’s why.

When a bank takes possession of a property through foreclosure, they want to sell it again quickly to recoup their costs. These can include the unpaid balance of the loan, outstanding property taxes, the costs of the real estate transaction, and any remaining liens they had to pay off. Since they want to do this quickly, a discount to move the property is not unheard of.

Foreclosed homes are also cheaper because they are not typically in turn-key condition. They need repairs—sometimes major—and they’re sold “as-is,” meaning that the lender is not going to make improvements to the property for you before you buy it or move in. This does mean that you can snatch up a foreclosed home at a lower price than a similar home in perfect condition, but you should be prepared for the cost of repairing and renovating it.

Pro: potential for investment

Because of the condition and lower price, the potential for return on your investment with a foreclosed home is high. They’re a popular option with experienced home flippers who can buy a foreclosed home at a discounted price, make the necessary repairs and updates, and then sell for a profit. Just make sure that if you’re planning to do this, you get a thorough and detailed home inspection in addition to contractor estimates on the cost of repairs before you buy. This will help ensure that your investment makes money and doesn’t end up costing more than you can get out of it when you sell.

Pro: bargaining power and concessions

With a foreclosed property, you may have more bargaining power and an easier time getting concessions on the terms. Why? Banks are not in the business of owning property, because between taxes, insurance, and an emergency cash fund, owning property costs money—so they want to get out quickly. Additionally, banks don’t live in the home you’re buying and have no emotional attachment to it. This means that they’re more likely to make concessions to sell a foreclosure quickly than a conventional seller. If a bank is trying to move a foreclosure that’s been on the market for a while, you’ll have a lot of bargaining power and should ask your real estate agent about what requests they think are reasonable in your market.

Con: unpredictable timeframe

Despite banks wanting to offload foreclosed homes as quickly as possible, the timeline for actually closing on a foreclosed home can be unpredictable and take a long time. Even if you’re the only one who makes an offer—which is unlikely—the lender may own many foreclosed properties. This means it can take a while to work through all the requests for information and offers that come in, which in turn slows response times between parties. Foreclosures may have specific rules about when the home can be shown and by whom, which can get in the way of the inspection process. There’s also much more paperwork associated with buying a foreclosure, and completing and processing all of it takes longer than it does for a conventional home sale. 

All foreclosures are different, and every bank works at a different speed. Getting preapproved for a mortgage or having your all-cash offer ready to go is one way to speed up the process. Talk to your real estate agent for more tips on helping your transaction go smoothly.

Con: home condition

Foreclosed homes are typically not in great condition, and here’s why. If a bank is foreclosing on a house, it’s generally because the owner has not made their mortgage payments for an extended period of time. If someone is in a situation where they’re unable to make their mortgage payments, they usually also don’t have the time, energy, and money to spend on home maintenance and repair either. Homes tend to fall into disrepair before foreclosure is final, especially once the process has started and the owner knows the home will no longer be theirs. When they leave, they may not always be able to take all their belongings with them, which means that you could end up buying a home full of furniture, clothing, food, and even trash that you’ll have to dispose of later.

Additionally, once the owner has vacated the property, it will likely sit empty for a period of time before you purchase it. This opens the home up to squatting and vandalism, which can further deteriorate the condition of the home. For this reason, it’s important to get thorough inspections and repair estimates before you buy.

The bottom line

Buying a foreclosed home can be a good way to get a deal, but it’s not without risks. Talk to your real estate agent to find out if it’s the right decision for you based on your budget, timeframe, and goals.

Let's Talk
We use cookies to enhance your browsing experience and deliver our services. By continuing to visit this site, you agree to our use of cookies. More info

Terms of Use

This website is operated by Vantage West Realty Inc./AJ Hazzi, REALTOR®, a Brokerage who is a member of The Canadian Real Estate Association (CREA). The content on this website is owned or controlled by CREA. By accessing this website, the user agrees to be bound by these terms of use as amended from time to time, and agrees that these terms of use constitute a binding contract between the user, Vantage West Realty Inc./AJ Hazzi, REALTOR®, and CREA.


The content on this website is protected by copyright and other laws, and is intended solely for the private, non-commercial use by individuals. Any other reproduction, distribution or use of the content, in whole or in part, is specifically prohibited. Prohibited uses include commercial use, “screen scraping”, “database scraping”, and any other activity intended to collect, store, reorganize or manipulate the content of this website.


REALTOR®, REALTORS®, and the REALTOR® logo are certification marks that are owned by REALTOR® Canada Inc. and licensed exclusively to The Canadian Real Estate Association (CREA). These certification marks identify real estate professionals who are members of CREA and who must abide by CREA’s By-Laws, Rules, and the REALTOR® Code. The MLS® trademark and the MLS® logo are owned by CREA and identify the professional real estate services provided by members of CREA.

Liability and Warranty Disclaimer

The information contained on this website is based in whole or in part on information that is provided by members of CREA, who are responsible for its accuracy. CREA reproduces and distributes this information as a service for its members, and assumes no responsibility for its completeness or accuracy.


Vantage West Realty Inc./AJ Hazzi, REALTOR® may at any time amend these Terms of Use by updating this posting. All users of this site are bound by these amendments should they wish to continue accessing the website, and should therefore periodically visit this page to review any and all such amendments.