Florida Real Estate Blog

Pre-Foreclosure opportunity or not

Listen to the radio, they’re everywhere. Somebody wants to send you that special list of homes in Pre-Foreclosure. So do you jump in? Ponder this.

First, don’t get caught up in the hype. I heard an ad on WDBO yesterday for pre-foreclosures for as little as $9,000 or $120 a month. Don’t believe it, remember what

Dad said, “If it sounds to good to be true, it is”. So what are they and how do I get involved. They are notifications by the lenders to the owner once they have missed three mortgage payments. They are then put on a list, 80% of these people work things out and never go to Foreclosure. There is a step between Pre-Foreclosure and Foreclosure where opportunity lie’s its called SHORT SALE.

What is a SHORT SALE? That is a situation when the house you own is worth less than what you owe on it. IE: Bought the house in 2006 for $235,000 with 100% financing and now the Realtor tells me it will probably sell for $199,000. That leaves you with bringing a check to the closing for $36,000 plus closing expenses. Not a pretty picture but a fact in today’s market.

Once the seller has secured a Realtor they will begin the process. The Realtor will do the preliminary title work to assure no other debt exist on the property. They will price the home in an attractive range to get maximum showings in minimum time. Time is not their friend so they will aggressively manage the Sale price. If you are interested in the home contact the realtor and they will provide you with the recent sales in the area to help you decide if it is a good deal for you.

Remember Short Sales are just that, the bank is going to receive less than what they lent out. That does not mean they take .50 on the dollar. Once a contract is written they will require your Pre-Approval letter from your lender (not a pre-qual it must be pre-approved, there is a difference) they will then order their own BPO (Brokers Price Opinion and probably counter back) This will normally take 4 to 6 weeks so don’t expect a quick turn around on a Short Sale.Property is sold AS-IS with right to inspect. Do not expect the lender or the seller to do any repairs. They will not.

Next you should secure your lender and make sure you have all the documents they will need to generate your mortgage. You should confirm with them that they will be able to do the deal within 12 days calendar not business. If not find some one else. Good luck and give us a call if we can help.