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| What is a foreclosed home? If a homeowner with a mortgage on their property fails to make payments on that loan, then the lender will file a law suite to take back the property for non-payment of the loan. This action is called foreclosure. |
| How long does the foreclosure process take? Generally, the homeowner's bank, mortgage company or lender does not file this law suite until the homeowner, the mortgagor, is 3-4 months behind in payments. Even after the law suite is filed, the lender will do their best to get the defaulted homeowner to make good on the loan. From the first filing, until the final judgment when the court orders the home to be auctioned on the courthouse steps typically takes just a few months. However, it is not unusual for complications such as bankruptcy or a death of one of the defaulted homeowners to drag this process out even longer. This is why it can sometimes be a year or more from the time you noticed a home abandoned until a "for sale" sign is posted on the property. |
| Can anyone attend the auction? Once the court issues
a final judgment in favor of the bank or mortgage company, the home will be
auctioned on the courthouse steps to satisfy the judgment. All monies
received at the auction are applied and paid to the first mortgage and any
remaining monies are paid to the second mortgage or any other parties with
liens on the property. If there is any money left it would go to the
homeowner that has just been foreclosed. This auction is public and held on the courthouse steps by the clerk of the court. You can bid on the property. On residential property the bank holding the first mortgage will usually lead the bidding. They have to bid to protect their investment; otherwise you or I could purchase the home for next to nothing. For example, Mortgage Company "XYZ" is holding a $150,000 mortgage they have just foreclosed. They will bid the $12,000 to $150,000 owed to recapture as much of their investment as possible. If no one bids against the mortgage company, many times they will bid as little as possible to avoid paying Florida Documentary Stamps on the Deed, or known as a deed transfer tax in other parts of the country. |
| How long do I have to pay for the property if I buy at the Courthouse? In Florida courthouse bidders are required to place a non-refundable cash deposit of 10 percent of the purchase price immediately upon being the successful bidder for the property. These funds are paid to the Clerk of the Court. The successful bidder then has seven calendar days to pay the full balance of the property. |
| Can’t I get a better deal buying at the Courthouse? Maybe, maybe not. Due to the number of books and courses promoting buying foreclosures there are often in excess of 100 people bidding on the courthouse steps. Auction fever is common and veteran courthouse observers often shake their head in amusement at the prices being paid for some of the properties. Furthermore, properties purchased at the courthouse steps do not have title insurance. If there are any problems with the property title it becomes the buyer’s headache and expense to clear the title. |
| How are prices determined? When the bank/mortgage company receives title to the property they will contact Cliff Roe Realty, Inc to begin marketing the property. We will give them our opinion of value for the property in its present condition as it sits, and our opinion of the value of the home if it were put back into tip top shape. Most often, the bank or mortgage company will also have the property appraised by a licensed appraiser and obtain two other Realtors® opinions. Nearly always, pricing is based on market value. |
| If the property is in poor condition does the bank
know? Yes, always. Cliff Roe Realty, Inc is responsible for
providing as many photos as necessary along with a detailed description of
all damages we can locate. If the property is appraised the appraiser will
do the same. In addition Cliff Roe Realty, Inc is often asked to provide up to three estimates for the bank/mortgage company to restore the home back into top shape. If we are required to obtain roof inspections, termite inspections, central heat and air conditioning inspections and estimates for repair, etc. |
| Does the Bank/Mortgage company repair properties?
Many do. In recent years, approximately half the properties we
market for banks and mortgage company's are repaired and refurbished.
Generally, repairs are cosmetic in nature, paint, carpet, re-grouting of
tile, replace a torn screen, a cracked window, or a mirror in which the
silver backing is coming off, and reconditioning of appliances. If needed
roofs are replaced or other major components might be replaced. In the refurbishment process, the Seller will not put tile down where there was vinyl flooring. Nor will the bank convert a partially converted porch, but more than likely return it to a porch. If the bank repairs a property, they will utilize only appropriately licensed contractors. |
| How does the bank determine whether to repair a property? The bank wants to get rid of the property as quickly as possible while also being mindful of its objective or recapturing as much of its costs as possible. The decision is therefore based on their market data and the actual cost of repairs. If the bank feels they will recapture their repair costs, or significantly reduce their time on market they may choose to refurbish the home. |
| Can I still buy the home "AS IS"? Until
the bank orders the repairs, you can still make an "as is" offer. Once the
repair process begins then it is too late as materials and labor have been
contracted. The key here is the value of your offer. For example, if the bank plans on selling the home for $100,000 with repair costs of $8,500, they will not sell it to you for $75,000, but they might sell it at $85,000 to $90,000. Simply stated, they might discount the price of the home a reasonable amount for a quick "AS IS" sale, but they will not give the home away. |
| Doesn't the Bank/Mortgage company want to get this home off their books, after all, they are not in the real estate business? Yes, absolutely. However, a general rule of thumb indicates for every $3,000 they reduce the price they can keep the home another 30 days. It is Cliff Roe Realty, Inc job to keep the bank informed of current market conditions. They know if it is a Seller’s market. In essence, they know that once the property is repaired, they are likely to get their price within 60 days. |
| Why are some properties repaired and other are not? Sometimes a bank that normally repairs properties will choose not to repair a particular property due to other factors. Not all banks and mortgage companies repair their foreclosed homes. Some prefer to sell them "AS-IS". |
| Are properties ever sold on a bid basis?
If a property is to be sold on a sealed bid or auction type basis, the
information sheet on this web site or the MLS listing will indicate it is to
be sold in this manner. Generally, it's like buying any other home in the neighborhood. You will write an offer with a Cliff Roe Realty, Inc agent or your own Realtor® using the appropriate contract form along with any addendums required and we submit it to the Seller. The bank will only negotiate if we have more than one offer on the property; a multiple offer situation. |
| What happens if there is more than one offer on a
property? When this occurs, buyers will be requested to submit
their highest, best or final offer by a certain date and time. The bank
seller will accept the best offer, give a counter offer, or reject all
offers. If you have submitted an offer on a property along with other buyers you may be given a second opportunity to submit your best offer for the property. Your best offer is the value in which at one dollar more you do not want the house...but at one dollar less you would have been mad at yourself for not having offered more. In a multiple offer situation, you may not get that counter offer because another buyer is offering more for the home. Quite often, in multiple offer situations, the home will sell above the Seller's asking price. During the hot market of the past few years some properties have several offers within 12 hours of listing, and the property will sell above the Seller's asking price. |
| Is there a Seller Disclosures for REO properties?
None. The Seller has never lived in the property and therefore can
not disclose what it does not know. There is not a former occupant we can
contact to obtain information about the home. Rarely does the bank Seller
obtain an inspection of the home. In those instances where the bank Seller has performed an inspection of one or all components of the home, we will provide you copies of the bank's inspection for informational purposes only. For example, if we have been required to obtain a termite or wood destroying organism inspection we will provide you with a copy once an offer has been received and before a final contract is negotiated. If we have inspections of the roof, air conditioning, or other components of the home, we will provide those once an offer has been received but before a final contract is negotiated. These inspection reports should not take the place of your buyer hiring their own inspector. . |
| Will the seller Negotiate? It depends on the bank.
Usually banks do not have to negotiate or accept an offer lower than their
asking price because there are buyers ready to give them their asking price.
There are situations where a home may not be receiving market attention
(i.e. it is on market more than 60 days and not sold) and then the Seller is
likely to be negotiable. In the end, it is really no different than buying any house. If you want to make an offer the day someone puts their home on the market they are not likely to be negotiable. If you find their home after it has been on market a few months you are likely to find them negotiable. |
| Will the Seller pay closing costs? Can I ask for
repairs to the property? Corporate sellers are bottom line
oriented. In other words, they are looking at the net sale to the company.
For example, if you are offering $100,000 and requesting $3,000 in closing
costs, the Seller considers this a $97,000 offer. Most Bank/Mortgage Lenders only like to perform those repairs necessary for your loan to be approved. An amount must be negotiated into the contract at the time of offer. If no repair provisions are negotiated at the time of offer, and your lender requires repairs to the property, then the sale price will have to be increased to cover the cost of those repairs. You will not be allowed to go into the home to do repairs prior to closing. Only the Seller's licensed contractors will be allowed to perform repairs to the property. |
| How do I make and offer? To make an offer you
contact your Cliff Roe Realty, Inc associate or your Realtor®. At the time
of offer you must provide a Mortgage pre-qualification letter or
pre-approval letter, it must be on the correct contract. Once we receive the
correct documents, your offer is submitted to the Seller in a format the
Seller has instructed us to use. To the corporate Seller, there is no personality to the offer. Quite frankly, they are just looking at the numbers. NOTE: Some institutions require the buyer to get pre-qualified by one of their agents just to insure the buyer is truly qualified. You can then use them as your mortgage broker or seek representation elsewhere. |
| Will the banks accept a Letter of Intent? No. Letter’s of Intent are not given any consideration. When we receive a Letter of Intent, the Seller is notified of the Letter as the law requires us to “Submit all Offers.” However, that is as far as it goes, as currently all of the corporate Seller’s we represent instruct us not to present any offers that are not properly written on the forms they specify.. |
| How are negotiations handled? Once you
make an offer on a bank owned home, you instruct the Cliff Roe Realty, Inc
agent (or your own agent) to write the offer. The offer is then presented to
the Bank Seller. The Bank Seller will give us a verbal acceptance, counter
offer or rejection. In the case of an acceptance or counter offer, this is verbal from the Bank to Cliff Roe Realty, Inc and is transmitted verbally to you. All negotiations are conducted verbally until a final agreement is reached between you and the Bank seller. Once that agreement is reached either the original contract offer is amended or a new contract is prepared containing the agreed upon terms. You the Buyer will sign or initial the contract and then the copy with your original signature is sent via overnight mail to the Seller. It will take the Seller anywhere from three (3) to seven (7) days to sign and return the fully executed contract to us. |
| I am an investor purchaser, why am I being told my
deposit is non-refundable? Several banks have adopted a policy
towards investor purchasers, in essence removing financing and inspection
contingencies. This in essence makes the investor purchaser’s deposit
non-refundable. This is due to several reasons:
1. The market is so strong there are generally multiple offers. In accepting the best offer, they will be loosing several other buyers if the first buyer fails to close. 2. It is a case of one or two bad apples ruining it for every one.
Specifically, some investors do not take the time to see the property until
their offer has been accepted. Then they want to use the inspection clause
to cancel the contract. This is to eliminate offers in which the buyer has
not seen the property prior to offer. |
| When/how do I finalize my loan application and begin my inspections? Once all terms are verbally accepted by you and the Seller you must finalize your loan application and begin your inspections. You do not wait until the signed contract is returned from the Bank Seller. If you are obtaining financing your mortgage company's appraisal must be completed during the inspection period defined in the contract. |
| Why is there a charge for a Late Closing?
Time is money. In nearly every instance the corporate Seller will have a
clause in their addendum that states if the sale does not close upon the
agreed upon close date, buyer agrees to pay a per diem of $100 - $200 - $300
per day for each day the contract is extended. For example, if the contract
close date is January 3, 2005, and you need until January 8 to close you
will be charged $500 to $1,500 in addition to the contract purchase price.
The per diem charge generally includes weekends and Holiday’s. The reason for the late charge is that when the bank accepts your offer price it is based upon a specific close date. If you fail to meet the close date, it costs the corporate seller to hold the house. They are passing that cost to you. |
| Can I get a better deal if I pay cash? The closing date is more important than the means the buyer pays for a property. A cash buyer that needs thirty days from contract to closing is not as desirable as a financing buyer that can close within 14 days. Many cash buyers are really obtaining financing. They just make an offer without a financing contingency. Remember, we are required by the corporate seller to verify the means and the buyer’s ability to pay for the home. Financing buyer’s should instruct their mortgage broker to provide the strongest letter of pre-approval. |