Orlando Real Estate

Tips on Buying a Foreclosure

January 25th, 2010 8:09 AM by David W. Welch

I find myself helping a lot of buyers looking at foreclosures these days. They are often the best deals at least from the perspective of purchase price. They can take a toll on you emotionally though if you are not prepared for multiple offers, long bank delays, even longer bank addendums and short time frames. Let's start by looking at the multiple offer situation. The first thing you should know is that everybody is looking for the best deal. Everybody wants the home with the fewest problems for the lowest price. In Orlando we have been closing over 2,000 sales on over 3,000 new contracts each month with over 8,000 pending sales back logged. Every single one of these deals invloves a buyer looking for the best deal. Remember this when you find a nice house at a great price, and you find out there are multiple offers on it. It happens frequently in our marketplace. A foreclosure in Baldwin Park recently sold for $60,000 over the asking price. When I showed the house the first day on the market there was a line to see the house. Under pricing is a popular strategy on with these homes, so look at comparable sales before making an offer.

Because these homes are frequently garnering multiple offers, yours may not be selected. Be prepared to write multiple offers of your own, and keep an eye on homes that you don't get. They frequently come back on the market when buyers are unable to meet the banks deadlines. You may get a second chance. Do not expect a quick answer from the bank on your offer, although some are very timely most take days to get back to you. When your offer is selected, you have to wait a little longer for the bank's addendum. Typically, you will have one day to rewrite your contract, and signoff on the bank's addendum. Fannie Mae and Freddie Mac have 15 page addendums. These addendums will freak you out if you are not prepared for them. Basically, they disclose that this property could have all kinds of scary problems like mold and lead based paint, and you should have inspections for everything imaginable. The contract of course is "as-is", so do not expect the bank to repair anything or to be held liable for anything. They will also expect you to have these inspections and make your determination  as quickly as possible even if that means having inpsections on the weekend. Then they expect you to close on time or face stiff penalties for delays. They on the other hand will get around to it when they are ready. Expect delays for HOA estoppels.

In the end, you will be getting a good price. The banks just expect you to abide by their terms. Have your proof of funds or pre-approval letter ready, and your check for the escrow deposit. Best of luck, and let me know if I can help you.

Orlando Real Estate, David Welch Real Estate Optimist, As Seen On HGTV's House Hunters

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Posted by David W. Welch on January 25th, 2010 8:09 AM

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