Foreclosures Need A Lot Of Work

Foreclosures Are BARGIN CHEAP. Foreclosures are generally cheaper than standard sales, but they are not quite the savings that most Tampa real estate discount hunters are looking for. Typically bank owned properties require appraisals.  Also, banks will have Realtors give a an opinion of value equivalent to a quick sale in the market. The price may be significantly cheaper than what the original owner paid, but not too drastic from what the current market is. Be realistic with the prices; they may be at maximum 15-25% off the market price, not 50%.

Foreclosures Are RISKY. Buying a foreclosure at an auction on the court house steps can be very risky. The chance that the home carries liens and other loans do exist. Though, typically buyers are looking for bank-owned foreclosures which are treated more like regular home sales.  Plus, the owner is the bank which means it will most likely result in a cleaner transaction.

Foreclosures Do Not Allow Inspections. Again, when you purchase a foreclosure from the court then there is a very small chance for an inspection of the home. When you purchase from the bank, they will allow inspections which enables you to determine prior to closing any major issues the property may have.  Though in almost all cases the home will be sold “as-is”, meaning the bank will not complete and/or pay for repairs prior to closing, the inspection process allows you to add repair costs into the price of the home to get a clearer picture of actual cost.

Make Low-Ball Offers. The banks are NOT that desperate to give the homes away. In fact, more often than not, the homes sell for more than the list price. A foreclosure listing is handled just like regular a Tampa real estate sale, meaning the bank will consider lowering the price after a few weeks if they feel that the price is too high for the market.

You Have To Buy Foreclosures With CASH. This would most likely be the case with a property being sold at a courthouse auction, but not with a bank owned foreclosure. The property is treated like a regular sale, and conventional loans can be obtained. Only if the foreclosure is in really bad physical shape is it possible that it may only be purchased with cash.  The reason for such a situation would be that the property does not meet the standards for loan.

It’s Easier To Buy The Foreclosure With The Bank That Owns It. If you have difficulty getting a loan from other banks because of poor credit and you think working with the existing bank is a viable option, that’s just not the case. The bank just had a bad loan and had to foreclose, and they are hardly likely to provide a low credit buyer with another risky loan. The bank would be happy to provide a new loan to a buyer, but only if they qualified like any other person would.

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The other 60% of the current market are regular real estate sales. So how do they manage to sell their home?   They can sell quickly at today’s market price, and move on to the next property at a great value.  In most cases the properties do not have giant loans or the owners have had the property for many years (over 5).  They can afford to sell their Tampa real estate and are flexible enough to get it done.

If you fall into a situation where you need to move, but can’t sell (either because you’re not willing to take a loss or do not want to harm your credit), then leasing your home to a renter is a very viable option.

In an article provided by MSN, June Walbert of USAA explains some things homeowners should be aware of when renting a property.  This is great advice for any owner considering renting out their Tampa real estate.  “First replace your homeowners insurance policy with rental-home insurance. It covers the building and provides liability protection but doesn’t cover possessions, so it tends to cost about 20% less than a regular homeowners policy.” She also recommends including “a section in the lease requiring your tenants to buy renters insurance, which will cover their liability and belongings.”  In addition, she recommends that homeowners be aware of how reting will affect them at tax time.  “When you file your tax return, you’ll generally report rental income and expenses on Schedule E. You’ll be able to deduct your mortgage interest on the rental property, as well as insurance premiums, real estate taxes, advertising costs to rent the house, rental management fees, utilities you pay, travel to and from the property and legal and accounting costs.”

Smith & Associates Real Estate can assist with listing your Tampa real estate for rent and finding a tenant. We specialize in quickly locating qualified rental clients. Our experts will provide you with rental services that will allow for maximum exposure of your property. The steps would include having a property orientation, preparing the property offering, meeting and evaluating prospective tenants, preparing lease agreements prepared by a Florida eviction attorney ($50.00 fee), advertising, and processing of applications and credit checks. Please inquire with us about our fees. Smith & Associates Real Estate complies with all fair housing laws with applicants.

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Short sales constitute a good percentage of current Tampa real estate listings. Anyone who has ever been involved in a short sale knows that the short sale request process is like entering the wild west –  the rules change day by day and you never know what to expect. There has been a public outcry for regulation in regards to short sales since the Tampa real estate market (and the rest of the country’s) bubble burst.

In response, the federal government has released the Home Affordable Foreclosure Alternative (HAFA) Program which will take effect on April 5, 2010. HAFA is different from last year’s Home Affordable Modification Program (HAMP), in that HAMP was intended to help people retain their homes, while HAFA is intended to help people short sale their homes. HAFA offers guidelines by which homeowners can sell their homes for less than what is owed on the existing mortgage(s).  The program is supposed to streamline the short sale request process by using standard processes, documents and timeframes. In order to attract participation from lenders, lending institutions are offered financial incentives to follow HAFA’s guidance and use its standard forms. Nevertheless, the program is strictly voluntary and lenders do not have to follow the US Treasury Department’s promulgated guidelines. It is important to know that HAFA is not a law.

In order to be eligible for the HAFA program, borrowers must have applied for the HAMP program and their application was either denied or they were unable to keep up on the modified mortgage. The HAFA program utilizes documents that were already collected as part of the mortgage modification program and permits homeowners to get pre-approval for short sales. This is an improvement to the standard short sale because typically, lenders will only consider a short sale request if there is a buyer for the property. The HAFA program is limited to loans that were originated prior to January 1, 2009 on the borrower’s primary residence, which do not exceed $729,750 and which causes a financial hardship because the monthly payment exceed 31% of the borrower’s gross income.

Whether this new government program will help to move short sale homes in Tampa and thereby improve the Tampa real estate market remains to be seen.

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Sarasota witnessed a 17.7 percent drop in foreclosures between August 2008 and last month with 849 filings representing one in every 260 homes, according to a new report from RealtyTrac. Pinellas had a 5.7 percent drop year-over-year with its 1,944 filings representing one in 257 homes in some form of foreclosure.

The country as a whole was not as fortunate. Foreclosure rates were up nearly 18 percent nationwide with one in every 357 homes experiencing some level of foreclosure either from a default notice, scheduled auction or bank repossession.

“The August report demonstrates that there is still an ample supply of properties filing the foreclosure pipeline even when the outflow of bank-owned REO properties onto the resale market is being more carefully regulated,” said James J. Saccacio, RealtyTrac’s chief executive officer, in a release. “After hitting a high for the year in July, REOs dropped 13 percent in August, but we also saw a record high number of properties either entering default or being scheduled for a public foreclosure auction for the first time.”

Polk County had the biggest jump in foreclosures, rising more than 40 percent to 1,892 filings, or one in every 147 houses. Hillsborough County foreclosures rose 23.5 percent with 2,341 filings representing one in every 220 homes while Hernando County was up 22 percent with 515 filings, representing one in every 156 homes.

Pasco County had a 9.8 percent rise in foreclosures with 1,010 filings, or one in every 216 homes. Manatee County’s rate was up just under 3 percent with 942 filings representing one in every 180 homes.

Florida had the second highest foreclosure rate in the nation behind only Nevada with one in every 140 homes receiving some sort of foreclosure filing, according to RealtyTrac. Florida was one of six states — joining California, Michigan, Nevada, Arizona and Illinois — that accounted for more than 60 percent of the nation’s total foreclosures.

Among metropolitan areas, the top foreclosure-ridden regions were dominated by California and topped with Las Vegas. Only two Florida metros were in the top 10 — Orlando-Kissimmee at No. 8 with one in every 87 houses in some form of foreclosure and Cape Coral-Fort Myers at No. 9 where one in every 88 homes received a foreclosure filing.

Looking for foreclosure properties in Tampa Bay?  Take a look at Smith & Associates Real Estate’s ‘Best Values’ properties here.

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Foreclosure drops in two Tampa Bay counties, but U.S. up 18%

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