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Buying a Short Sale in Orlando - What you should know
By Jerry | July 22, 2008
I currently have 10 properties Listed for sale and 6 of them are short sales. I am finding that nearly 25% of the market right now in the Orlando, Windermere, Winter Garden Florida area is either a short sale property, a foreclosure property or Bank owned property. Buyers in Orlando can find a good home and purchase it at a discount, IF they work with a Realtor that know how to deal with short sales, Like Myself. Feel free to contact me at any time with questions about short sales and how to purchase a short sale at jerry@JerryLaRose.com or visit my Website at http://JerrySellsOrlando.com
Everyone involved in a short sale transaction needs to know what to expect. Orlando buyers of short sale properties need to understand what they are getting into. Some buyer’s believe that they are going to be able to “steal” a property and make a killing by reselling it. The days of Flipping homes is long gone. They have heard the stories that investors tell and think it’s a piece of cake to buy a property at 50% of the value.
While that may be the case on rare occasions, it is not the norm and should NOT be expected. Remember, the lender wants to sell the property as close to market value as possible. In fact, most lenders have pretty rigid guidelines as to how far below market value they will sell for. I have heard that some banks no matter what will not go below 15%-20% of market value. Beyond that point, they will take the house back in foreclosure. So let’s do the math, a $200,000 valued property may go for $160,000 - $170,000. Now, this same property was probably valued at over $300,000 just 3 years ago.
So, the bottom line is that if you have patience and are looking for a home in Orange county or the Orlando area you may end up saving 15%-20% of market value on a home. However, I am also finding that there are now plenty of homes that are Not Short Sales but the Homeowner needs to get out for some reason, (such as relocating) and has priced their home as low as a short sale. This is probably the ideal situation because typically the home is in great shape.
What buyers need to know?
- Patience, Patience, Patience. It may take 3-4 months to complete the transaction once you’ve written a contract on the property.
- Buyers must be be pre-approved before submitting an offer. The borrower’s lender is going to require proof of funds if it’s a cash deal or a commitment letter if there is financing involved. A buyer offering to close quickly with a substantial down payment is more attractive than one seeking 90% financing.
- Buyers may not want to spend money on a home inspection or appraisal until after the short sale is approved, otherwise you’re wasting your money. Why spend hundreds on a inspection and have the bank not approve the deal.
- Buyers should expect to buy the home in it’s “AS-IS” condition. The seller doesn’t have any money to make repairs and the lender is going to require an as-is offer. Therefore, your realtor should be using an “AS-IS” contract.
- I recommend to all of my short sale buyers that we do NOT put up a deposit in escrow until acceptance of the offer by the bank. We’ll give a promissory note in lieu of.
- I recommend the buyer work with a short sale expert, like myself. Working with Realtors that don’t know the short sale process and the pitfalls to look out for could kill a potential deal.
Feel free to contact me at any time with questions about short sales and how to purchase a short sale at jerry@JerryLaRose.com or visit my Website at http://JerrySellsOrlando.com
Topics: short sales |