Every few weeks someone asks me about a listing priced well under what the street should command, and the answer turns out to be the same: it is a power of sale. The follow-up question is always whether that makes it a bargain or a trap.
It can be either. The difference is almost never the price. It is what you find out before you commit, and what you give up in exchange for the discount.
What a Power of Sale Actually Is
Power of sale is Ontario’s most common remedy when a mortgage goes into default. It lets the lender sell the property to recover what it is owed without taking ownership first, which is the main way it differs from foreclosure. The borrower keeps title right up to closing, and any surplus after the debt, costs and other registered claims are paid belongs to them.
That last detail matters more to buyers than it sounds. Because the lender has a legal duty to make reasonable efforts to obtain fair market value, a power of sale is not a fire sale, and the discounts are usually narrower than people expect. A lender who sells well under value can be pursued by the borrower for the shortfall, so they generally do not.
Where the Real Discount Comes From
When a power of sale does trade below comparable sales, it is rarely because the lender wanted less money. It is usually one of three things.
Condition. Nobody has lived in the property attentively for months. Heat may have been off through a winter, maintenance deferred, appliances removed. The lender has no personal knowledge of the building and will not warrant its state.
Time on market. These sales run on the lender’s process rather than a seller’s motivation, and that process is slower. In Richmond Hill in August 2026, homes took 37 days on their current listing but 61 days counting relistings, and a property that has cycled through more than one listing usually shows it in the price.
Uncertainty. Buyers pay less for questions they cannot answer before closing, and a power of sale generates more of those than an ordinary purchase does.
The Protections You Give Up
This is the part worth understanding before you write an offer.
- No seller property information statement. The lender has never occupied the home and makes no representations about it. Anything you want to know, you find out yourself.
- Sold as-is, where-is. Standard in these agreements. If the furnace fails the week after closing, that is now your furnace.
- Limited warranties on title and chattels. What stays with the property can be less certain than in a normal deal, and appliances shown in photographs are not always still there.
- Lender-drafted schedules. The lender’s own terms typically override the standard clauses in the agreement, and they are written to protect the lender rather than to balance the deal.
None of that makes the purchase unwise. It does mean the usual reliance on a seller’s disclosure is simply unavailable, and your inspection and your lawyer are carrying weight they do not normally carry.
How the Offer Process Differs
Expect it to feel slower and less personal. Decisions go through an institution rather than a person, so responses take days rather than hours, and there is little room for the back-and-forth that shapes an ordinary negotiation. Conditions get scrutinised harder, because every condition is a way the deal might not close, and the lender is optimising for certainty.
A clean offer with a realistic closing date will often beat a slightly higher one loaded with conditions. That is a genuine tension: the situation calls for more due diligence than usual, while the process rewards fewer conditions. The way through is to do the work before you offer rather than after.
What to Check Before You Offer
- Comparable sales, carefully. The question is not whether it is cheaper than the street, but whether it is cheaper once repairs are priced in.
- A full inspection, with the systems running. If the utilities are off, ask about having them turned on. A refusal is itself information.
- Title search early. Other registered claims, arrears or liens can complicate matters, and your lawyer needs time to look.
- Repair estimates before the offer, not after. Vacant properties hide their problems in the places that cost most: roof, furnace, plumbing, water ingress.
- Financing that will actually fund. Lenders are sometimes cautious about as-is purchases in poor condition. Confirm with your mortgage broker rather than assuming.
Is It Worth It?
For a buyer with some renovation tolerance, a contingency budget and no urgent moving date, a power of sale can be a genuinely good purchase. For a first-time buyer stretching to their limit with nothing left for surprises, the same property can be the worst possible choice, because the risks land exactly where there is no cushion.
Richmond Hill gives buyers more room than its neighbours at the moment, with 5.6 months of inventory in August 2026 against Markham’s 4.1, so there is less pressure to take on a complicated purchase simply to get in. That is worth weighing before deciding the discount is the only thing that matters.
None of this is legal advice, and the details of any power of sale turn on the specific mortgage and the lender’s conduct. Talk to a real estate lawyer before you sign, not after.
Frequently Asked Questions
Are power of sale properties cheaper in Ontario?
Sometimes, but less than people expect. The lender has a duty to make reasonable efforts to obtain fair market value, so deep discounts are uncommon. Where a real gap exists it usually reflects condition or uncertainty rather than a lender willing to accept less.
What is the difference between power of sale and foreclosure?
In a power of sale the lender sells without taking ownership, and the borrower keeps title until closing and any surplus afterwards. In a foreclosure the lender takes ownership. Power of sale is far more common in Ontario.
Can I get an inspection on a power of sale property?
Usually yes, and you should. The lender will not warrant the condition, so an inspection does the job a seller disclosure would normally do. If utilities are off, ask about turning them on so the systems can actually be tested.
Do I need a lawyer for a power of sale purchase?
You need a lawyer for any Ontario purchase, and more so for this one. The lender’s schedules typically override the standard agreement terms, and someone has to read them properly before you are bound by them.
Considering a power of sale listing in Richmond Hill, Markham, Vaughan or North York? Reach out before you write the offer and we can look at the comparables and the condition risk together, while there is still room to walk away.