Tag Archives: foreclosure

Ask The Realtor: Is there still time to purchase investment property?

YES!  With the strong real estate recovery, many think the opportunity for investing in real estate is over.  But while hedge funds may have backed off, private investors are still pouring money into the market.

Core Logic reports that 37.4% of 2013 sales nationally were cash transactions.  In Florida, our cash sales were a whopping 54%.  Cash sale account for most REO, short sale and condo purchases.  Investors are putting their cash into real estate because they can get a good rate of return not found with banks.

The Chinese are investing here also, and have expanded their footprint across the USA.  Their top ten cities of choice are: New York, Los Angeles, Detroit, Houston, Chicago, Las Vegas, Atlanta, San Diego and Memphis.  (How did they miss our wonderful Jacksonville?)

Interest rates have hovered around 4.5% and have not slowed housing sales at all.  It is possible to finance an investment purchase with 20-25% down, but cash may be required for bank properties needing a lot of work or condos not on a “bank approved” list (two top places to find bargains).

I love real estate and invest in it my myself!  If you are considering an investment purchase, please give me a call at (904) 386-9816.

Buying or Selling a Short Sale

Have you ever heard  Realtors complain about short sales?  There is endless paperwork, they take forever, no one at the bank returns their calls or answers their emails – the list goes on and on.

So, why do I love short sales?  Because in my work, there is no more satisfying way to help a seller out of a distressed situation while helping a buyer find a really great house.  Short sales are a win-win situation for both the seller and buyer.

For the Seller:

  1. Yes, there is some paperwork.  You will be asked to furnish tax returns, bank statements, pay stubs, as well as a financial worksheet and a letter explaining your financial hardship.
  2. In a short sale, a seller does not take away any money at closing; nor does he have to bring any money to the closing (unless negotiated with his lender).  If someone asks you to pay in advance to help you with a short sale, don’t do it.  It is most likely a scam!

For the Buyer:

  1. Your purchase and sale agreement is negotiated between you and the seller, but will be subject to the seller’s lender approving the reduced pay-off.  The time it takes for the seller’s lender (or lenders) to approve the short sale can take between 2-3 weeks and 9 months or more!  If you need to be into a new home immediately, then a short sale may not be a good idea.
  2. It is important to work with a Realtor who understands the short sale process.  You want to be certain that once accepted, your offer will be the only offer presented to the bank.

In summary:  For a seller who wants or needs to sell and owes more on his home than it is worth, a short sale is almost always the best solution.  Quite often, the seller is able to negotiate total debt forgiveness on the unpaid portion of his loan.

For a buyer who has a flexible time schedule, purchasing a home offered as a short sale can offer a great value and instant equity.

For more information on Short Sales vs Foreclosures, please visit my website.

Buying a Foreclosure

Buying a foreclosed home can be an excellent way to purchase a home far under market value.  Since the bank already owns the home, you can expect to receive an answer on your offer within a couple days, and be able to close in 30 to 45 days.

So what  should you be aware of when considering a bank-owned home?  First, as mentioned in my previous blog, bank-owned homes, or REOs, are normally sold “as is”.  What you see is what you get!  I  highly recommend both a home inspection and a wood destroying organism (WDO) inspection.

A second concern is a potential title problem.  It has become an alarming trend in our real estate industry of banks listing properties for sale before verifying that they have clear title to that property.  Many foreclosures in Florida were not done properly.  If the foreclosure was not done properly, then a bank is unable to obtain clear title, and thus, cannot complete a sale to the buyer.  Unfortunately, the buyer is usually informed of the title issues AFTER he has invested many hundreds of dollars in inspection and loan fees.

In summary, purchasing a bank-owned home carries some risk but can offer an incredible return.  Contact me  for more information.

What Is the Difference Between a Short Sale and a Foreclosure?

The difference between a foreclosure and a short sale is one of ownership.  In a short sale, the seller still owns the home.  Because he is underwater on his mortgage, meaning he owes more on the home than the home is worth, he is asking his mortgagor, the bank, to accept less than the full amount he owes as payment.  In order to qualify for a short sale, the owner must be able to demonstrate financial hardship and must show that he is unable to make his present mortgage payment.  Usually, but not always, the seller is already behind on his payments and is in some state of pre-foreclosure.

In a foreclosure, the bank has already foreclosed on the home, and is now the owner.  The home is  maintained by an asset manager for the bank while it is listed for sale.  Foreclosed homes are called REOs,  meaning real-estate-owned.

Why would a buyer consider purchasing a short sale or foreclosure?  Simply put – money.  It is possible to get a great deal on an REO or short sale.  A buyer with some risk tolerance and a lot of patience,  can walk out of closing with instant equity in his new home.

What should a buyer look out for when purchasing an REO or short sale?  One thing to be aware of is that most REO and short sale properties are sold “as is”.  Short sale sellers are already in a distressed financial situation and rarely have money for repairs.  Banks are not in the “fix-up” business; they want a quick, as is sale.

The best defense a buyer has is to get a home inspection and a wood destroying organism (termite) inspection.

Next: Differences in purchasing an REO and a Short Sale