What should buyers know before buying a Markham power of sale, estate sale or auction home?Power of sale, estate and auction homes can offer opportunity, but they usually sell as is, with few or no promises about condition. In a power of sale, the lender sells after the owner defaults, and its agreement often lets it cancel if the owner pays off the debt before closing. In an estate sale, the executor may know little about the home, and closing can depend on estate paperwork. Auctions are rare for Ontario homes and usually require a firm, unconditional bid. Inspect carefully, line up financing early and have a lawyer review the lender or estate terms.
Buyers often hear that power of sale and estate homes are bargains. Some are priced well, but most are listed at market value, and the risks are different from a regular resale.
Michael John Lau, a REALTOR® with the Kaizen Real Estate Team, one of the most active real estate teams in Markham and York Region, helps buyers understand the extra terms and risks in these sales before they write an offer.
The three types compared
| Type | Who sells | Main risks |
|---|---|---|
| Power of sale | The mortgage lender, after default | As-is terms, owner redemption before closing, limited access |
| Estate sale | The executor or estate trustee | Little knowledge of the home, possible closing delays |
| Auction | Varies | Firm bid, little time for due diligence |
How power of sale works
Under Ontario’s Mortgages Act, after a default the lender can give notice and, once the notice period passes, sell the home. The lender must take reasonable steps to get fair market value, so these homes are usually listed close to market price. Expect a lender’s schedule in the agreement that:
- Sells the home as is, with no warranties.
- Allows the lender to cancel if the owner redeems before closing.
- Limits what the lender will do about chattels, repairs or vacancy.
How estate sales work
An estate trustee sells on behalf of the estate. They may not know the home’s history, so the Seller Property Information Statement is often skipped. Depending on the will and the title, the trustee may need a court certificate of appointment before they can close, which can take time. Ask your lawyer to confirm the trustee’s authority and timing. For the seller side, see the executor’s guide to probate sales.
Considering a power of sale or estate home?
Michael John Lau can review the terms, recent sales and risks with you before you offer.
Book a buyer consultationSearch Markham homesPrefer to talk? Call the Kaizen Real Estate Team at (647) 370-8885.
Condition risks
- Homes may have been vacant, with unheated or unmaintained systems.
- Deferred maintenance, leaks or pests can go unnoticed.
- Utilities may be off, which makes testing difficult.
- Appliances and chattels may be missing or not working.
Get an inspection, even if it means a short condition or an inspection before you offer. See the home inspection checklist.
Financing challenges
Lenders may hesitate to finance homes in poor condition, and appraisals can come in low. Get a full pre-approval, tell your lender the type of sale, and keep extra cash for repairs. A financing condition protects you if the lender declines the property.
Auctions
Auctions are uncommon for Ontario homes. When they happen, the bid is usually firm, and you must arrange financing, inspection and legal review before bidding. Treat it like a firm offer with a short deadline.
Due diligence checklist
- Have a lawyer review the lender’s or estate’s schedule before signing.
- Inspect the home, including roof, basement and mechanical systems.
- Check for work orders, open permits and unpaid taxes.
- Confirm vacant possession and what happens to belongings left behind.
- Get title insurance and confirm the survey.
- Compare the price with recent sales, not the listing’s description.
Ultimately, the decision is yours. The goal is to make sure you have all the information before you offer.
In as-is sales, your own due diligence is your protection. Call the Kaizen Real Estate Team at (647) 370-8885 or book a consultation.
Frequently asked questions
Are power of sale homes cheaper in Markham?
Not usually by much. Lenders must try to get fair market value, so most are listed close to market price.
Can a power of sale deal be cancelled?
Often yes. Lender agreements usually allow cancellation if the owner pays off the debt before closing.
Can I inspect a power of sale home?
Usually yes, but access and utilities may be limited. Ask for an inspection before or as a condition of your offer.
What is different about an estate sale?
The executor may know little about the home, and closing can depend on estate paperwork such as a certificate of appointment.
Are home auctions common in Ontario?
No. They are uncommon, and bids are usually firm.
Can I get a mortgage on a power of sale home?
Yes, but lenders may hesitate on homes in poor condition. Get a full pre-approval and keep a financing condition if you can.
Michael John Lau and Neeraj Moolchandani are licensed REALTORS® with the Kaizen Real Estate Team, eXp Realty, Brokerage, 9763 Markham Rd, Markham, ON L6E 1A4. Licence #4784577. Call (647) 370-8885. Power of sale rules are from Ontario's Mortgages Act as described by Ontario real estate lawyers. Estate transfer requirements vary by will and title. This is general information, not legal advice; speak with a real estate lawyer. This article is general information only and is not financial, legal or tax advice. Not intended to solicit buyers or sellers currently under contract with another brokerage.
