A power of sale is a lender selling a home because the borrower stopped paying. It is not a foreclosure: in Ontario the lender does not take title, it sells the property under the terms of the mortgage and must return any surplus to the owner. That one difference shapes everything about how these homes are priced, shown and sold.
Why they can be good value
Lenders want the loan repaid, not top dollar. Homes are usually priced at or just under recent comparables to sell within weeks. But the lender also has a legal duty to get fair market value, so the days of 30% discounts are mostly gone. Expect 2 to 6% below a comparable private sale, and sometimes nothing at all when several buyers show up.
What is different about the offer
- Sold as is. No warranties on appliances, systems or the condition of the home. Budget for an inspection and for repairs.
- Schedule B. The lender's own terms attach to the offer and override the standard form. Your lawyer reads this before you sign.
- Redemption. The owner can pay the arrears and cancel the sale right up to closing. It is rare, but your deposit comes back and the deal ends.
- Chattels and contents. Often excluded; sometimes the home comes with the previous owner's belongings and the cost of removal.
How we bid on them
Price to the last three solds, write a clean offer with a short irrevocable, and keep the financing condition unless your pre-approval already covers the appraisal gap. Lenders prefer certainty over an extra few thousand dollars.
Power of sale is a discount on certainty, not on price. Bring an inspector and a patient lawyer.
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