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What is a foreclosed home?
If a homeowner with a mortgage on their property fails to make payments on that loan, then the lender will file a law suite to take back the property for non-payment of the loan. This action is called foreclosure.
Do many financial institutions deal directly with the
buyer on their foreclosed properties?
No. Most use Realtors. It is far more efficient for lenders to
deal with a real estate agent than multiple buyers. Also, by having
a listing agent place the bank's REO (real estate owned) properties
in the Multiple Listing Service (MLS) they have a better chance of
selling these foreclosed properties.
Can I just take over the
payments of a foreclosure property?
Very unlikely. In the majority of foreclosure sales in Florida, the title has been cleared and there is no mortgage to assume.
How can you finance a property needing extensive repairs?
Although it is complicated, the FHA 203(k) program works for properties needing $5000+ in repairs. This is a combination home purchase-improvement mortgage based on the increased market value after renovation is completed.
This FHA program is for single family homes and some condominiums
(with certain restrictions). The HomePath
program provided by Fannie Mae also may be used to finance the
rehabilitation of certain properties.
How much profit can you expect on a 'fix-up' property?
It depends. Buying a house in good condition and hoping to earn a profit is not realistic. Don't count on buying a house, giving it a quick paint job and reselling it quickly for a big profit. Look for a sound, well-located property priced below market value needing improvements that add more value than cost. There is no magic formula.
Can you write an offer on your own contract form the way you want it?
You can certainly specify the terms and conditions you want, but most institutional sellers have their own contract forms and special
addendums they want real estate agents to work with. Generally you must do it their way without any changes or deletions on the sellers' forms.
Can I make an offer
on a foreclosure based on the sale of another property I own?
No. Institutional sellers of foreclosures want to sell quickly and will not
wait for you to sell another property in order to close on their
property.
Can I get a discount for an all cash
offer on a bank foreclosure?
The closing date is a big factor and the end of a calendar month closing may mean
more carrying costs to the bank. If the source of cash funds can be verified, a cash offer with a quick closing
date is usually seriously considered.
What are the
benefits of buying a foreclosure?
Foreclosures are generally priced below the
current market value. Lenders want to rid themselves of the properties as
quickly as possible to reduce carrying costs. Also, a REO property
is considered a liability on the bank's books instead of an
asset.
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