Orlando Investment Homes For Sale
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Central Florida Foreclosures, Pre-Foreclosures and Bank-Owed Homes for Sale
Once the realm of hard core investors, more regular buyer's are considering a distressed property to live in. In many cases first time buyer's are looking into distressed properties. Below are some random tidbits of information you will find helpful when considering a bank owened, pre-foreclosure or foreclosure for your purchase.
Bank Owned, Pre-foreclosure and Foreclosure homes may represent a good savings compared to a regular sale. However, there is more risk involved and the process to buy a distressed home can be very frustrating and time consuming compared to a regular sale.
Bank Owned, Foreclosures and Pre-Foreclosures require a lot more patience if you are a buyer.
- Each lender has their own procedure for accepting and reviewing offers.
- Some lenders will collect offers until a certain date then decide who gets the property.
- Some lenders will review offers as they come in.
- Sometimes lenders hire another company to screen through offers.
- The price that is listed on a Foreclosure or Pre-Foreclosure listing may be artificially low just to attract as many offers as possible. The lender simply doesn't want to talk to agents UNTIL we get an offer.
- Even if a property has 10 offers, the process can take so long that many of those people have bought other properties.
- There are many steps to take in order to complete a "short sale". If the listing agent did not perform the steps required, the process may take 4-8 weeks to complete.
- The seller and listing agents have little to no say when it comes to purchase price. The decision maker will often be a negotiator in the loss mitigation department usually no where near the physical location of the house.
- The lenders are losing money. They will not hire more staff to lose money more quickly. They will get to our offer when they get to it. There is no way to speed up the process.
- It could take a few days to a couple months to get a response to an offer when the property is in Pre-Foreclosure or Foreclosure status.
- Bank-Owned houses are easier to deal with as the bank has already set a price with the listing agent.
- All Bank Owned, Foreclosures and Pre-foreclosures are sold "AS IS" with right to inspect. Some distressed properties have electric and water on, but many do not.
- Just because a house is listed as a Pre-Foreclosure or "Short Sale" that doesn't mean the owner is behind on payments, taxes, and HOA fees. Some people know well in advance they will not be able to pay the mortgage when it resets.
- A "Short Sale" = Seller owes $300,000 to satisfy mortgage. Property is worth a maximum of $250,000 based on last 90 days of sold comparable properties. The seller would be $50,000 "short" of satisfying the mortgage.
- 3rd Party approval means that it's a short sale and the lender will approve the sale. Buyers are one party, sellers the other, therefore the lender is the 3rd party.
- BPO - Brokers Price Opinion. A more detailed Comparative Market Analysis the bank pays to get opinions on how much the house is worth in the current market.
- I usually ask listing agents if they have - Been in touch with the lender, been assigned a specific negotiator from the lender, whether the list price was approved by the lender, whether a BPO was ordered, how long do they feel it will take to get a response to an offer, do they have any offers pending review by the lender- if so how much were the offers, has the lender rejected any offers and if so what was the offer price.
- A bank-owned, pre-foreclosure, or foreclosure may end up selling for well over the cheap list price if it's a quality property.
- The buyer may need to cover some seller's closing costs in a distressed sale.
- The buyer may be responsible for any unpaid liens such as property taxes, water bills, HOA dues, CDD fees, or any other recorded or unrecorded liens against the property.
- Property taxes will be based on a value much greater than what you will likely pay for the house. You should dispute your tax value when you get the first bill of the year. This is usually done by calling or writing the county property appraiser.
- Sometimes, it is possible to get an equally good deal from a regular sale where the owner is very motivated and has a lot of profit to work with.
- I encourage people to have at least 3 offers out there in case their top pick doesn't work out.
In conclusion, bank owned, pre-foreclosures and foreclosures MAY be a good deal, but there is a lot to consider when buying such a property. You need to have a lot of patience and be a risk taker to buy a distressed property.
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