Its all good. I know close to nada about US real estate, so we are even.
I don’t think that power of sale and the foreclosure auction would be a direct comparison.
Power of sale in Canada essentially happens when the homeowner is delinquent on their property tax payments and first mortgage payments. Once the homeowner is behind on payments, the bank takes over and makes the homeowner sell the home, so that the bank can recoup any losses.

You are right… the best way to go is to get to the homeowner before it goes power of sale. The only trouble though is since these power of sale lists are kept on the d low by the banks… it is quite hard to figure out what homeowners are distressed and need to sell…
.-= Neil Uttamsingh´s last blog ..A message from the author =-.

I assume power of sale is like a foreclosure auction?

I guess, then, the best way to go (if at all) would be to get to the homeowner before the power of sale?

Thanks for the education, btw- I know nada about Canadian real estate.

Funny enough, since my last monster comment on your blog, the Canadian Federal Government just tightened up mortgage rules again in Canada. The announcement was made today and was front page news.

Anyways, to your point, there are definitely distressed sellers due to job losses, divorces, illness etc. Most of these homes end up going power of sale.

It is EXTREMELY tough to get your hands on the Power of Sale lists that banks have. The banks guard these lists like the Knight guarded the Holy Grail in Indiana Jones and The Last Crusade.

You cannot get your hands on this list unless you have a major IN with someone. As such, the sweet deals (homes to buy at a discount) are only scooped up by a select few.

Also, since the population of Canada is only one tenth of the population of the US, we do not have the same volumes of distressed homes on the market, that you guys would have.
.-= Neil Uttamsingh´s last blog ..Everybody loves Canada =-.

So, if I am understanding you correctly, the banks in Canada actually qualify people who apply for mortgages, as opposed to just handing them out to anyone who can fog a mirror, like they do here in the US? What a novel idea. Hehe.

I can see how that would keep the foreclosure rate very low, but what about people who are in trouble and need to sell quickly for other reasons; job loss, death in the family, illness, job transfer,divorce, etc? I would think there are still many motivated sellers, which would create opportunity to buy at a discount, no?

In my opinion, there are a number of reasons why wholesaling does not work in Canada. I have compiled this information just based upon my own observation and experience.

1) Banking regulation in Canada is very strict.

Many Canadians poke fun at our banks and our banking system, often times out of frustration. The frustration is felt by Canadians, because they perceive the banks to be very ‘tight’ with their regulation. The truth is, they actually are. As such, there have always been very strict guidelines with regards to issuing mortgages. As a result of these strict guidelines, the Canadian market has…

2) A very low mortgage default rate.

I have heard this stat before, and it is actually quite ridiculously low. The sat I believe is less than one percent. This percentage is not exact, so don’t quote me…However, it is very close to what I just quoted. Needless to say, it is shockingly low.

As a result of the two points above, many people in Canada who end up obtaining a mortgage for a property, have been thoroughly qualified, and for the most part are perceived by the Canadian Banks as being a low risk for default.

Another reason why I think that Wholesaling does not exist in Canada is because…

3) There is less competition between banks.

In Canada we have only 5 major banks. These 5 major banks own the Lion’s share of the market. There also exist many other banks, however, they are for the most part unknown, and hold close to no market share.

Because we have less competition between the banks, the banks do not have to make changes to their banking products at the detriment of the bank.

As an example, in Canada we used to be able to amortize our mortgages over 40 years. Of the Big 5 banks in Canada, only a few banks offered the 40 year amortization. Not all of the banks wanted to offer the 40 year amortization, because they felt is was too risky of a product.

As a result of many of the variables above, and due to the strict regulation of the Canadian banks, Canada did not experience a dramatic decline in housing values during this past recession.

There were many areas of Canada where the values held, and many areas where the values continued to increase.

As a result, in Canada, we do not have homeowners who are distressed and need to unload their homes. There is the odd power of sale here and there, but that is it.

So in summary, I think that wholesaling does not exist in Canada in the same way in the States, due to the strict regulation of the Canadian Banks. The strict regulation make is very rare for a homeowner to get into trouble with their mortgage, because a lot of time is spent by the bank, making sure that the homeowner will be at a low risk of defaulting.

I hope my monster response made some sense…

Onwards and Upwards,
Neil
.-= Neil Uttamsingh´s last blog ..How to buy your first rental property – Step Seven =-.

I’ve heard from some other people in Canada that wholesaling doesn’t work there, and have always wondered why? Is it a legal issue?

Would love to have your fellow Canadians stop by- thanks for telling them about me.

Steph

They are never able to close in 3 days- I just put that in the offer to make it look stronger. They will usually send their addenda back with a closing date 3 weeks to 30 days from the date of the contract.

But yes, if I was not able to close and I made an offer with no contingencies, I would lose my earnest deposit…

Steph

Thanks!
JJ