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Buyer Tips
Foreclosures, Short Sales,
Bank or Corporate Owned Homes
What are these?
There are a few reasons why the
real estate market is down from 2007. But I am not going to go
through those reasons but otherwise look at what we are
dealing with at the present time. The common theme and phrases
we see and hear in real estate since 2007 comes from these
dreaded words: foreclosures, short sales, and bank or
corporate owned homes. Here's a quick explanation for each of
these terms:
Foreclosures or
Pre-foreclosures: Home owners who have continually failed
to pay their mortgage on time or avoid payments for months
causes the banks to foreclose on the home. Before foreclosure
proceedings start, the banks are required to send a notice by
mail to the mortgagors or owners which they will be given a
time (usually 30 days) to correct the problem. After the time
has passed and the bank has not heard from the owners, the
proceedings starts and foreclosure is filed by the bank to the
courts. Homes like these usually have liens ties to it such as
unpaid equities, HOA's, taxes, and/or improvements. Be ready
to pay for this items in addition to the selling price. If you
are going through a foreclosure, I strongly advise that you
consult a real estate lawyer.
Short Sales: A way to
avoid foreclosure is through a short sale. A short sale is an
agreement between the owners and the bank or mortgagee to sell
the home at a price lower that what is owed. The bank takes a
considerable loss from this transaction. The owners will still
be responsible in selling the property and the contract and
selling price contingent upon the approval of the bank. If you
are experiencing difficulties with the monthly payments of
your mortgage and believe you can no longer keep the property
but would like to avoid foreclosure and save you credit
standings, call your bank and talk to their representative to
arrange a short sale. Contact a real estate agent to help you
sell your home as a short sale.
Bank Owned or Corporate
Owned Properties: This type of properties have already
completed the foreclosure process and is now owned by the bank
or corporation. The properties are usually being sold as-is
with right-to-inspect and are free from other
liens.
Tip of the Month
Where Have All The Buyers Gone?
It's amazing that during these times where home inventories
have soared and prices have gone down considerably, and not to
mention cash incentives that builders and sellers are throwing
out to the buyers, not many people have taken advantage. 2009
is totally a buyers market! There is no better time to buy
than now.
Buying a home between 2004 and 2006 has never been tougher. Buyers from
different parts of the country were eager to jump into real
estate investing. Most homes here in the Tampa area were bought by real estate investors and resold with a decent
profit. Because of various trends that started in 2003, home
prices rose to ridiculous prices that peaked in 2006. In 2003, the average home
price in the the Tampa area was at $150,000. In 2006, it went up to about $250,000. New construction homes used to go up
in price every quarter and then it started going up about $5,000.00 a month.
This seems unexplainable. But what do you expect when suddenly
a surge of home buyers are coming out of nowhere?
So, the big question in 2006 was: "Is it still the right time to
buy?" Comparing prices of homes in California, Las Vegas
or even Sarasota, FL, homes in the Tampa area were still
considerably lower. Builder inventory homes were down and not easy to find. Lotteries
and waiting lists were very common.
In late 2006 and early 2007, inventories of new
construction homes were on a stand-still and sits in communities with
little to no buyers to come and see. To sell all these homes,
Tampa Bay area builders brought their prices down to between
$15,000 and $60,000 off the original selling price and were
giving so much incentives which brought the new construction
home 'sold' statistic up by end of April 2007.
It's also no secret that home foreclosures have risen in
the past few months. New investors who basically jumped too
late in the real estate market in the last 3 years had gotten
bitten. This does not mean that buying a property in today's
market will give the same result. Home prices has certainly
leveled down here in the Tampa area. I recently saw a 2,100
sq/ft home built in 2005 with 3 bedroom, 2 bath and 3 car
garage, den and a 1 year old pool with fence listed for
at least $30,000 less than it's appraised value. This is a
steal!
There are plenty of homes out there right now to choose
from. So, if you're a first time buyer or an experienced
one - and still debating, its
always an advantage to know as much information as you can in
today's market. Don't wait, the time is now. Before
shopping, go through the list below to get prepared.
- Know your budget. A pre-qualification process will give
you an informed opinion on what you can afford.
- Gather information on the true cost of home ownership -
taxes, insurance, closing costs, and upkeep.
- Pre-approval is based on the documentation and verified
information you supply concerning your income, employment
and cash flow. This process is a sign of your intent to
the seller and proves you are credit worthy.
- Know your neighborhoods and decide where you want to
live. Is it important to be close to your job or services
such as restaurants and entertainment? Or would you rather
live in a more secluded area? Talk to your potential
neighbors and visit the area during different times of the
day.
- Decide what kind of house would work best for you. Will
you be more comfortable in a colonial 2 story or a
condominium? What are the important elements in a home - a
big back yard, a large kitchen and dining area for
entertaining, a garage? Keep a list and make sure your Real
Estate professional knows what you want!
- If your search includes new homes, choose a reputable
builder and make sure you have in writing the cost of the
'bare bones' plus an itemized list of any upgrades. And
know that a new house may cost a bit more than one that is
pre-existing. (Tip: Check on any hidden operating costs
such as homeowners' association fees and CDD's.)
More answers can be found in our FAQ's
page.
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