THE OPPORTUNITY OF A LIFE TIME IS HERE

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CAPE CORAL SHORT SALE AND BANK OWNED MARKET

The foreclosure inventory is dwindling. Cape Coral inventory is primarily "normal" listings now with only about 15% of the inventory being foreclosure listings. It's time to buy.

This is it. The opportunity most investors and first time buyers have been waiting for. Prices are unrealistically low. EG: if it costs $100 a foot to build a home on your lot, you can now find homes already built and maybe just a few years old for $40-$70 a square foot. The opportunities are currently endless as most good deals are either preforeclosure, short-sale or REO (bank owned). Once this is over, it is over ands we will get back to normalcy. Whether we will see another cycle of such deeply discounted properties is anyones guess. But since the last time seems to have been the Great Depression, I am guessing it may be a while.

Buying bank owned properties
There is a lot of information out there about the current market, some good and some bad.   Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know “the secret formula”.  The fact is that there are no secrets, and to make money does require effort. There is a technique to working with Bank Owned properties and you must worth with a Realtor that trully knows what they are doing.

What’s an REO?                                                                                
REO stands for “Real Estate Owned”.  These are properties that have gone through foreclosure and are now owned by the bank or mortgage company.  This is not the same as a property up for foreclosure auction.  When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process.  You must also be prepared to pay with cash in hand.  And on top of all that, you’ll receive the property 100% “as is”.  That could include existing liens and even current occupants that need to be evicted.  A REO, by contrast, is a much “cleaner” and attractive transaction.  The REO property did not find a buyer during foreclosure auction.  The bank now owns it.  The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.  Do be aware that REO’s may be exempt from normal disclosure requirements.  In California, for example, banks are exempt from giving a Transfer Disclosure Statement, a document that normally requires sellers to tell you about any defects they are aware of.

Is it a bargain?
It’s commonly assumed that any REO must be a bargain and an opportunity for easy money.  This simply isn’t true.  You have to be very careful about buying a REO if your intent is to make money off of it.  While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.  The bargains with money making potential exist, and many people do very well buying foreclosures.  But there are also many REO’s that are not good buys and not likely to turn a profit. 

Ready to make an offer?
Most banks have a REO department that handles these properties.  Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.  Before making your offer, get with your Realtor to find out as much as you can about the property and that particular banks method of accepting offers. Trust me they are all different. Banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.  As with making any offer on real estate, you’ll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.  After you’ve made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.  Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends.  It’s not unusual for the process of offers and counter offers to take days or even weeks.

What price do I offer?
This is where doing your homework will really pay off? Working with an experienced Realtor is a must.

• Currently in the Cape Coral market bank owned properties sell in as little as 1 day.
• They may have over 10 offers on each property.
• They may come back with highest and best to you
• Selling price might be below, at, above or WAY ABOVE asking price, depending on the level interest in the property
• Expect to be asked to close quickly or no longer than 30 days out. Once a deal is struck, the bank wants to get it closed and off their books.

I deal with REOS and short sales all the time. Call me today with all your questions.

WHAT IS  A SHORT SALE?

A short sale, to put it simply, is a sale that occurs when all parties agree to the sale of a house and the lender or in many cases lenders (if there is a second mortgage on the property) agrees to accept a pay-off amount that is less than the actual loan amount on the property.

In Florida there are short sales occuring everyday and there are so many of them that they are actually dictating the market pricing, by their sheer volume. For example, many home owners paid $200-300k for homes that are now being short-saled for under $100k.

Short sales can be very tedius and time consumming. Many Realtors stay away from them, much to the demise of their buyers.  Because the Realtor does not want to "work that hard" they steer buyers to REOS (bank owned) which are easier to negotiate.

Whether you are working with an REO or a short-dale, be prepared for at least some frustration and grief.

However, my experience has been that banks are now "getting it" and because of that they are speeding up the process. If a buyer chooses to avoid all short sales they will find inventory very limited and frankly often very defective (yucky neighborhoods, ugly house, ugly floorplan, missing ACs, lots of work needed, etc... In general be prepared to spend p to four months from beginning to end of the short sale buying process.

Some tips:

Get prequlified and know exactly what amount you qualify for.

Banks require a "proof of funds" letter if you are paying cash or an approval lender letter if financing.

Know what you are looking for-narrow down your search and stay focused

Recognize pricing-sometimes you will come in low and other times you will face a multiple offer situation and will have to "outbid the competion" Either way you will win, if you know your pricing and are comfortable with the price you are offering. It is not the percentage of sales price that matters but whether the property is worth what you are paying.

Get with a Realtor that knows what they are doing. I cannot tell you the crazy things I have seen from inexperienced Realtors.

Call or email me with all your short sale questions.