Foreclosure Frenzy

So you want to buy a foreclosure?

In the beginning of the year, between January and June, I was approached by several people looking to buy a foreclosure for investment. I searched, we saw, they bought.

The story is no longer the same. Now it's more like, I search, we see , they put in an offer and someone else buys it.

Why has it become so difficult? Simply put, there are more fisherman fishing, with bigger hooks and better bait, (all cash).

Basically, foreclosures on the MLS have become quasi auctions. Listing agents never intend to sell their properties for the list price. With so many buyers, corporations, and individual investors chomping at the bit, competition for foreclosure is fierce. I've heard that in some cases, a foreclosure has had over 30 offers at once.

So what to do? Here are some tips:

1.) Be prepared to bid above the asking price, sometimes way above. Take a look at the recent comps in the area and you will see in many cases, foreclosures are selling for higher than the asking price. Be sure to bid accordingly.

2.) Pay all cash if possible. If you are, however, going to get a loan, you should try to put down at least 30%. Some banks consider 30% down the same as all cash. Also, if you are getting a loan, and are making a bid above the appraised value, you will have to come to the closing with cash. The bank is only going to lend on the appraised value.

3.) Determine what the other guy is paying and pay more. Figuring this out is not too difficult, but still tricky. An investor's rule of thumb is to get at least 1% of the purchase price as monthly rent. If the house will rent for $1,500 then the investor doesn't want to spend for than $150k after repairs.

RADIO CHECK: Sometimes an investor is willing to break this rule if they think the property will have a better back-end return. The investor may accept a smaller cap rate up front in order to get a better return after the property appreciates over time.

Overall, buying a foreclosure is not impossible, it's just not as easy as it was earlier on in the year. The word is out and there are now many people in the foreclosure market to compete against. Banks prefer to work with all cash buyers, or those putting down large down payments. My suggestion for the average buyer, if they cannot afford to pay cash, need FHA financing, or don't have a full 30% to put down, is too take a serious look at a short sale. Short sales can still be a "Great Deal", they just take longer to get approved by the bank. Read my previous blog "What's the hold up" to learn more about the short sale process.

Well, that's our show for today. Join us next time when we talk about the "New Market." We'll examine what's happened to the real estate market over the past year and how it is different from what some may call a "Normal Market." With new rules and guidlines for buying and selling, todays' real estate market is much different from a year ago. So stay tuned.

So for now, that's all there is, there is no more. This is Aaron Glassman signing off. Thanks for Reading!

http://www.a1realtygroup.net/

http://www.a1titleandescrow.com/

http://www.lglassmanlaw.com/

**Photo taken from internet. I Had trouble finding something suitable to post in my own collection.

What's The Hold Up?

When I write my blog, my inspiration mostly comes from the issues that I find my self dealing with on a daily basis. Recently, I find myself dealing with a very slow but steady short sale market. Typically I'm asked the question, when are things going to turn around? I usually say that things have turned and we are through the worst of it. Just look at the closed and pending sales this year.

The bigger question is: what's holding up the short sale market? We can easily be further through these tough times if the banks just figure out a way to get through the short sale glut. There are a tremendous amount of pending short sales on the market right now, and if these could just get processed in half the time it is currently taking, we'd be through these hard times twice as fast!

Simply put, the banks are holding up the real estate market! There are many reasons for this, but for the most part, nobody is truly sure why. It could be because the banks want to wait for a specific fiscal quarter to take a loss, or maybe they only approve short sales once a month, Again, nobody knows for certain, but many people I talk to also say that the banks are simply overloaded and can't get through the contracts fast enough. I mentioned in a previous blog that this should change for the better, sometime soon. Then again, not soon enough.

Either way, the short sale market is like a clogged drain. Unfortunately I'm not a plumber and I don't seem to have any liquid draino around.

For some extra value I offer these few points when buying a Short Sale:

1.) Ask if it's an approved or unapproved short sale? Typically, an approved short sale can take up to half the time as an unapproved short sale! This is because, in order to get the approved status, a short sale must go through the BPO process and be approved by the bank. What tends to happen is that the initial buyer who got the short sale process started, got tired of waiting and took their contract off the table. In the meantime the process went forward without the buyer, and now there is a small window of opportunity for a new buyer to put in a contract after all the processing has been done. A buyer can still get a discount off the price, but if the BPO is current, then the bank would want to get a price close to asking.

2.) How the Seller's Realtor handles the short sale is very important. Each Realtor has their own way of processing a short sale. This one of of the reasons for the overall delay when dealing with a short sale; there is no one, uniform way of processing them. Either way, as a buyers agent I like for the seller's Realtor to put the listing into either back-up or pending status. This should keep prospective buyers away from your listing, as it is no longer showing up as "Active". If the other Realtor is entertaining your offer along with several others, than it becomes a bidding war and like a foreclosure, a quasi auction. This is good for the seller, but not for buyers. Either way, it is important to a have a cooperative Realtor on the other side handling the processing.

3.) Find out who is responsible for selecting the escrow agent and title company. Many people don't understand this part of the transaction, however, it is probably one of the most important parts of the entire process. With whom you put your money with, and how much you will get charged for closing costs is a tad on the important side. The seller may say that they are going to select the title company and pay for the title insurance premium, but there still are some closing costs you will be responsible for paying for.

RADIO CHECK: No longer is the buyer in Broward and Dade county responsible for selecting the title insurance company, at least not for a short sale or foreclosure. What's happening is that the seller will offer to pay for the title, in order be able to get the short sale processed for free. The seller doesn't actually have to pay for anything, because it's the banks who truly pay for it. This enables the title company or lawyer who is processing the short sale to eventually get paid for their work. The buyers don't care, because they don't have to pay the title insurance premium. I don't even think the banks know that they are not customarily supposed to pay for the title insurance policy, but they don't care either, because they'll just short the Realtors commission by a percent to pay for it. Either way, my title business is getting crushed by, what I think is an unlawful practice and a violation RESPA. The buyer will still have to pay for some of the closing costs and never gets to pick the company charging them for those fees.

That's it for now. Feel free to call me to discuss all of your short sale needs.

This is "Awesome A!", signing off. Thanks For Reading!

Aaron Glassman, Broker/Owner
A-1 REALTY GROUP, INC.

http://www.a1realtygroup.net/
http://www.a1titleandescrow.com/
http://www.lglassmanlaw.com/


***Picture taken from the stern of the Carnival Imagination, sailing South from Miami to Key West.

BON VOY-A-GI

As I sit here in front of the computer, hastily typing away, I feel the long toll of the day pulsating throughout my feet. They hurt! I must say that getting ready for my mom's 70th birthday cruise has wiped me out. With so much to do, I can't believe I've found the time to write. Well if you call a quarter to three in the morning the time to write.

It is, however, my duty to bring you, my readers, a constant, consistent and cohesive chapter of today's real estate world. If it were a book it we be called, "The night of the living real estate market." You know that's kinda catchy, not too mention that last Saturday was Halloween.

In my slight state of exhaustion, I jest. It is true, though, that today's real estate market is alive and well. In fact there are several areas of real estate which have been very busy. Foreclosures, which on the the MLS is more like a quasi auction, are having a huge impact on the market.

Short sales, as slow and tiresome as they are, do eventually close.

RADIO CHECK: The short sale process, if you have the time to wait, is a good option for all three parties invloved. It allows the bank to get more than they would if the property went into foreclosure. It allows the seller to be released from the mortgage, while having a lower impact on their credit score than a foreclosure would, and it allows the buyer to tpically buy a property at a discount. Although that may start to change as new comps begin to show up and a base/bottom is developed.

Also, Don't underestimate the power of the traditional sale. I know what you're thinking, "They still have those?" Yes, they do. I, myself, just closed on two properties where neither of the sellers were in distress. The buyer in one deal, in fact, had excellent credit and brought twenty percent down, while the buyer in the other deal paid all cash. In the last year, actually, most of my deals have been either all cash or a lot of cash down. In one case, actually, the seller's brought almost a 100k to the table!

One more thing, while doing some research for a prospective seller in a upscale condo, I saw that in the past four months there were at least a dozen sales in her complex. The closed sales ranged from 600k to 1.45 million. There is definitely money out there, and it's definitely being put to work in the South Florida real estate market!

Buyers, now may be a good time to take advantage of rates close to five percent. Seller's, this may be a good opportunity to list your home for sale. For those of you who still have some equity left in your properties, there are many people actually shopping right now.

So as I set sail into the sunset today, I bid you Avior. Know that I leave South Florida with an optimistic attitude, toward today's real estate market. Yes, while that attitude can quickly and easily change to cynical or pessimistic, know that I am encouraged by the fact that there is a lot of business waiting for me when I get back. Each day brings a new sunrise and with it a new Pina Colada!

This is your host, Awesome A, signing off, and as Bugs Bunny would say, Bon-Voy-A-Gi!

Thanks for Reading!

P.S. I will update today's picture after I get back from my cruise. I should have a more appropriate shot by then. For now you are looking at one of the amazing water slides at Aquatica, in Orlando at Sea World.

Remember to check out our other websites: http://www.a1titleandescrow.com/ & http://www.lglassmanlaw.com/

Also you feel free to e-mail me at : yoursouthfloridarealtor@gmail.com