Foreclosure Properties and What Florida Buyers Need to Know…
Foreclosures are also called “Bank Owned” or “REO’s” (Real Estate Owned) so what does all that mean?
“In Foreclosure” means that the bank has notified the owner of the home that they are in default on the mortgage because the monthly payments are long overdue.
If the owner does not pay up and bring their account to current status, the home will go to a foreclosure sale.
The “Foreclosure Sale” is the last stop before the owner no longer owns the property...the bank will own it after the sale date.
At the sale, it is rare that an investor will buy the property and more likely that the bank who holds the mortgage will be the top bidder as they buy their property back through the foreclosure process.
How long does the Foreclosure Process Take?
That varies, but in Florida that may take several years. First, the bank notifies the owner repeatedly and that part usually takes over a year and maybe even up to 3 years or more, before it is actually sold.
So, just because Zillow or Trulia or the County Tax Records show a mortgage delinquency, it is not the time to get excited, as the property is not yet ready for you to buy. Sure you can buy it now from the current owner( they still own it) but usually there is so much overdue with penalties that the payoff is usually more $money than the property is worth.
Hard Facts about Foreclosure Property
More than likely a foreclosure property will be in some stage of distressed condition...People that cannot afford to pay the mortgage,will also not be keeping up with the maintenance issues of the property.
More than likely, a foreclosure property will draw multiple offers...too many people think that a foreclosure is automatically a good deal. (Not so)
More than likely a foreclosure property will sell for close to full price or more than full price as some buyers mistakenly assume that the bank only wants to recoup what was owed.
Don’t be fooled…
In the old days the bank would just want to dump the property, so the sale price was a deal. Today, it is a different story...
Banks are greedy. They want to squeeze every dollar, so today they will do a cheap rehab (paint and carpet) and then they will put it back on the market at market value...or more.
I have seen foreclosures go for a much higher price than expected and even for more than the appraised value. Even on a “short appraisal”, I have had the bank refuse to budge on the price. I even had a bank try to increase the already top dollar price for more $ just prior to closing.
What kind of offers do banks want?
- Cash offers
- Few or no contingencies
- “AS IS” with no request for repairs
- Buyer not asking for closing costs
- Quick closings; less than 30 days
Will the bank negotiate a foreclosure?
Maybe if it is a stale listing. Typically negotiations are all different. It depends upon the bank, the specific property, price point, location, condition of the property and how reasonable the asset manager is.
The bank does not need to review offers in the order received. They can choose to negotiate any offer, or no offers, or all offers at the same time. They can even accept an offer with a lower price than yours.
There are no rules for the banks, so they can do whatever they want...regardless if it is fair or not.
Once your offer is accepted, you will receive a supplemental bank addendum with terms that may change your original contract. The addendum protects ONLY the bank with addendum terms that may dilute any protection that you may have had in your original offer.
As your personal Exclusive Buyers Agent, we make a diligent effort to negotiate the lowest price and most favorable terms possible. We work only for you and never the bank.
Call us for more info: Buyers Broker of Florida 727-202-9130.
