A lender will do almost anything to avoid having to foreclose on a home. It looks bad on their books and affects the rate at which they can borrow money. If the home is foreclosed on, the second mortgage holder will usually get nothing since the property is sold right at what is owed on the first mortgage.
But foreclosures are not all bad news for the high-end real estate market. Nelson Gonzalez, a practitioner with Esslinger-Wooten-Maxwell, specializing in Miami Beach, says that the rash of foreclosures in Florida, which has the second-highest foreclosure rate in the country, has driven interest from out-of-town and foreign buyers looking to snag a deal.
Traditionally good borrowers with strong credit scores previously purchased a lot of these homes. In many cases, foreclosure has come about because the homes are now worth significantly less than the inflated prices the owners originally paid. The homes have sunk into negative equity situations and the previous owners don’t want to make the payments, so they walk away, says Wendell Cox, founder of Demographia, a housing research company.
Here are the 7 Tips that can save you Hundreds of Thousands of Dollars!
1. Certain Banks (the banks keep this secret) are doing whatever it takes to keep Real Estate off their books. In some cases they are giving houses away, up to 50% off the purchase price within the last 24 months! Research your area banks and find out which ones do this!
2. Lot prices are significantly lower than they were 12-36 months ago! Great news for the patient buyer. Homes built under construction to perm loans over the past 12-36 months have paid not only premium prices on the lots, and higher associated costs to build per square foot. If you built a brand new home today, and it was completed in the next 12-24 months, chances are you’ll pay 60% less for the lots and 30% less for the costs to build per square foot.
3. Speculators (Foreign and Domestic) with excellent credit scores, who got involved in the house flipping game are paying the price now with bad million dollar investments draining cash month after month, in some cases I have found deals of up to 50% off actual retail prices they paid! Some are taking huge losses to maintain their “A” credit rating!
4. Short Sales are an excellent means to find more deals of up to 50% off purchase prices before the banks take possession! If you have a qualified buyer and the listing agent has submitted a qualified “Short Sale” application, the higher the purchase price the more the bank will negotiate on the percentage they are willing to take off! Not too long ago banks would sell foreclosures at retail value…TIMES HAVE CHANGED!
5. Foreign Investors are having extremely hard times when it comes to obtaining financing especially on land purchases. Most foreign investors who have purchased properties in Southern Florida cant refinance. This has helped boost foreclosures in Miami and they are among the nations highest. When an investor has cash, which is king right now, he can purchase some of the best water front lots for 50% off or better!
6. One of the best strategic selling tools I have come across recently are finding home owners that own property.They have the ability to finance their own home to the buyer! This method reduces the lost if you were to have to sell in the current market conditions. I have found in some cases, that they are willing to reduce the purchase price of up to 50% , offsetting some of the losses incurred by the sale, but they recoup most of the losses buy charging higher interest rates than the bank would charge on jumbo loans.
7. Finding a motivated seller who is in Pre Foreclosure can increase your chances of finding deals of up to 50% off of what is owed to the bank. Purchasers will see immediate equity on the front end!
F. Pagano is a Top Producing Realtor in Florida in the Million Dollar Club!