Want to know how to take advantage of the recovering housing market?
It’s not always foreclosures, bank owned/REO or short sales! In fact, in the hot Tampa Bay real estate market, institutional cash buyers have flooded the markets. When rumor hits that one of these homes are coming to the market, there’s a thousand buyers for it. These homes represent only a fraction of the market today and with all the competition, they are not the bargains they once were. Additionally, many have land mines, debts, unknown liens and physical damages as well as other problems and inconveniences.
Continue reading to find out how to save yourself a bunch of headaches and still get an amazing deal and not buy a foreclosure, bank owned/REO or short sale.
Still want to buy a foreclosure, bank owned/REO, distressed property or short sale? I have a way of finding them before the institutional buyers find them. Fill out the “Ready to move?” contact form in the upper right corner or go here and I will contact you, set up a meeting and discuss what and where you want to buy.
Free and clear of liens? They may say they are free and clear, but when someone is in financial desperation, people do some strange things to keep themselves afloat. A home is sure way to put up collateral for getting money. So many things were happening so fast, many liens were never recorded. It will be a decade for all the hidden pot holes caused by the fall out of the former economy to surface and be corrected. You might be in the right, not to be responsible as the new owner of a foreclosed or short sale home, but you will be considered guilty until you prove you are innocent of the debt. Which means you may have to fight to prove you are innocent, involving lawyers and lawsuits. These issues cost you time and money to resolve, reducing the advantage of buying them in the first place.
Besides pot holes, the problem with foreclosures, bank owned properties and short sales is the psychology of thinking that if it’s a foreclosure, short sale or bankowned/REO home, it must be a good deal. Once upon a time it was, but not true any more. In fact, today it’s the opposite. This thinking goes back to 2008, 2009, 2010 and 2011 when the rapid descent in home values caused so much carnage and chaos. The banks had such a mess on their hands due to the rapid decline in home values, they unloaded these homes without systems in place and without knowledge of when or how the carnage would end. They unloaded homes without much research because the processors of these toxic loans were overworked and underpaid. They accepted mostly cash offers since cash was secure and the bad debts could be moved off their books quickly. Any short falls from these foreclosures and short sales at the end of the year was covered by the government either by forced mergers or government subsidies.
That was then. Looking back, the bottom of the home crash crisis was in 2011 for Florida. Banks were able to catch a breath of air and put systems in place. The banks, including secondary lenders like Fannie Mae are well oiled machines now. They know what home prices should be and they are taking full advantage of the recovery in home values. This is good news for the tax burden these toxic debts put on all us tax payers, but bad news for someone trying to get a good deal on a foreclosure, bank owned/REO or short sale home today.
The old thinking “it must be a bargain” psychology is still being used in selling these properties. Here is what fuels this bargain psychological thinking and how banks are taking advantage of you!
What fuels the bargain thinking is the new rules banks are required to use to unload these housing crisis properties. Under the new regulations, the home must be listed on the MLS and auctioned to the highest bidder. As with all auctions, the price starts well below the true market value for the home to create great interest. This price appears on the MLS as the listed price, but it’s only the auction opening price! Then the bidding wars begin. They don’t allow institutional buyers to enter into the bidding until a period of time has passed. This is supposed to help the small guy, home owner. The problem is the bidding doesn’t close until the bank gets the money they want for the home, which is usually at or near market value. (Full price is not a bargain, especially when you add a few pot holes) If the bank does not reach they’re goal with individuals, they open up the bidding to the institutional buyers. If the high bidder is less than what the bank wants, the bank buys it back and sits on it. If you are the winning bidder, you bought the property sight unseen with no guarantees and paid at or near market value. Which is a bad deal. If it cost you all you have to get it, it’s playing Russian roulette! This bargain bin, home buying mentality is perpetuated by the media and by those that don’t know about this or don’t participate in the bidding wars. They only see the low offering price on the MLS® or Zillow® or wherever and think that’s truly the price it’s selling for, which is not true at all. It is misleading, deceptive and mentally depressing middle class Americans.
The other approach that takes advantage of the psychology of thinking it must a bargain if it’s a foreclosure, bank owned or short sale is listing the home on the MLS over market value. These are usually when the open market bidding did not reach what the bank wanted, by individuals or institutional buyers. So the banks buy their own property at auction and put the homes back on the market for sale as bank owned/REO. The offering bank usually offers favorable finance terms if you finance through them and usually does not require an appraisal, because it probably wouldn’t appraise for their overvalued asking price. What’s good, is the downpayments are near zero and most homes qualify for financing as long as you use them for financing. What’s bad, is you paid over market value! If you get into financial trouble, the burden is now yours to try to get your money back out of the home. If you don’t succeed in selling over market value, like they did with you, they start the foreclosure cycle all over again and you’re now the bad guy!
I recommend you stay away from Foreclosures, Bank Owned/REO and Short sales unless you have a lot of cash, a lot of knowledge about homes and have brass &*(($!
Your best deals are found in motivated sellers. The economy is adjusting and producing new jobs. Some jobs are still being phased out, while new jobs are coming to the market. As people move in and out of these jobs, their needs for homes change. Some will need to sell their homes’ and relocate, while others may need to sell their home due to a job loss. To protect their credit, they will take drastic measures. This is where the opportunities are now and going forward.
If you are ready to buy a home within the next 60 days, you must have cash or be pre-approved. The real estate market moves very fast and the right home at the best price will slip away if you are not prepared. If you are financing your next home, get pre-approved. Go to a lender of your choice for the pre-approval letter. Not sure where to go? Call me for a recommendation.
Be sure to mention Curtis Rudolph Realtor® for preferential treatment.
Note: Most mortgage loans today will require 5% to 25% in cash at closing. And, in nearly all mortgage loans, the cash cannot be borrowed. Even the zero down, USDA programs must have at least 1% earnest deposit and 100% of the difference over appraisal or you won’t close.
Are you ready to buy within 60 days? Got cash or some cash and a pre-approval letter? Need an expert buyers agent? Call me at 813.240.6054 today and Let’s get to work!
You say you have a little more time or just want to see what’s out there? Fill out the floating Contact Us form and I or one of my team will contact you ASAP and set up a 15 to 20 minute face to face meeting. With your wants and needs, we’ll set you up in our system for an auto-search. This auto-search will send you an email the moment a property gets into the MLS® that meets your criteria. This focused search will save you a lot of time by filtering out what you don’t want and only sending you what you do. Contact us today!
We specialize as buyer’s agents in South Tampa, SOHO, Davis Islands, Channelside, Harbor Island, Westshore, Culbreath Isles, Culbreath Bayou, Bayshore Boulevard and Plant High School district homes. Specialty zip codes 33606, 33602, 33611, 33609, 33629. We are buyer’s agents for the rest of the Tampa bay areas including: Westchase, Country Way, Citrus Park, Fawn Ridge, Carrollwood, Carrollwood Village, Old Carrollwood, Keystone, Odessa, Lutz, New Tampa, Seminole Heights, Wesley Chapel, Land O Lakes, Avila, Lake Magdalene, North Dale, North Lakes, Lake Ellen and Forrest Hills. Zip codes: 33613, 33604, 33603, 33614, 33612, 33624, 33618, 33556, 33558, 33559, 33625, 33626, 33635, 33634, 33544, 33543, 33549, 33548, 34639.