Calgary foreclosures spike 30% as investors look for deals

First-time investorsHelen and TayoAdesinaare looking for a propertyto flip in Calgary and have theireye specifically on foreclosures because of the potential ofa deal.

"Yeah, that's what we are hoping," said HelenAdesina, as herhusband, Tayo,pipes in."Essentially that 's what we are hoping thatit's cheaper."

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The Adesinas are looking at a four-bedroom townhousein the southwest community of Glamorgan. It's one of about 70 foreclosure properties inthe Calgaryarea listed on MLS right now.

Realtor Kelly Kernick sayshe compared the last 90 days with the first threemonths of 2015 and noticed foreclosures have jumpedabout30 per cent.

"Well, I think it's part and parcel of people losing jobs," said Kernick, adding heexpects the trend will continue upwardthis year.

Kernick says, as a result, he's had a doubling ofinterest from investors in the past few weeks.

"Since oil started to slide, people with money who'd like to get into real estate have just been waiting for an opportunity," said Kernick. "People are thinking now is the time to pick up something at a good price."

Kernick says people have the perception that a foreclosure is automatically a good deal, but it's not. There are deals to be had, but it all depends on the propertyand how much work needs to be done.

"It's not like the U.S. where you are going to get stuff for pennies on the dollar," says Kernick, addingthe banks usually list it atmarket valueand then start to drop the price if it's not selling.

Alberta-wide trend

The foreclosure process begins long before the properties end up on MLS.Tim Reid, the VP of operations with Canada Real Estate Investors Club, says the company works with homeowners who are in arrears andstill have time to save their home.

Reid saysthe public can access a list of all the owners who have been served with a foreclosure notice from the banksthrough the courtsin bothCalgary and Edmonton. The list comes out once a week. His company compiles it, and then sells it toinvestors.

Reid has alsoseen about a 30 per centincrease in court filingsover the past sixmonths.

"And that's not necessarily always the full picture because these are just bank foreclosures that end up being the public filings, there are also private mortgages in the market place that we don't see."

The investors who buy from Reid often approach the ownersdirectly to try to buy them out of their situation, in some cases simply paying what's left on the mortgage,in order to save the owners'credit. Investorsmay also offer an equity loan to help the ownerspay off their debtsso they can stay in the house.

Ethical dilemma

When asked whether Reid believes he's taking advantage of someone else's troubles, he says absolutely not.

"Somebody may think that, and unfortunately real estate is a business justlike any businessand there arepeople thatdon't act upon ethical practicesand they do unfortunately take advantage of individuals, now that's not how we operate."

Reid says the company and its investors try to find a solution that works well for both sides.

"We've done things like our home relocation program where we will give that individual, that family, first and lastmonth's rent, I mean obviously they have to go somewhere," said Reid. "Wepay for moving costs, first months groceries... We want tohelp people out."

As for the Adesinas, that was one of the first things they had to wrestle with when they decided to look at foreclosure properties.

"For me personally, it will help if it's empty like this. I don't have to see the people and feel bad for them and think,'Oh my god, they're losing their home.'Their loss, my gain. Thatwas a big deal for me, how to deal with that bit ofit," said Helen Adesina.