Buying A Foreclosure – What you need to know

Buying a foreclosure property does not have to be a complicated process. Here are 6 tips to help you through the process:

Don’t Hesitate

There are a lot of people looking to buy foreclosed properties and the good ones sell quickly. Using SarasotaAreaForeclosures.com gives you an advantage because the ease of searching and the speed at which new properties appear on our website, enables you to be among the first to see the new foreclosures when they come onto the market.

Typically, a good-quality foreclosure will go under contract within 7 days of it coming onto the market, so be prepared to act quickly.

Often Owner-Occupants Get The First Shot…

Many foreclosures, especially those offered by Fannie-Mae are initially only available to buyers who intend to occupy the property as their primary residence. This is sometimes referred to at the “First Look Initiative”

In these cases, investors are prohibited from bidding on the property for the first 1 – 2 weeks that the property is listed for sale. If the home does not sell during that time, then it is made available to investors.

Be Able To Prove Your Purchasing Ability

When you place an offer on a foreclosure property, you’ll need to include with your offer proof that you can pay for it. Banks will reject any offer without proof of the buyer’s financial ability to complete the transaction.
If you are financing your purchase, you’ll need a pre-approval letter from a lender stating that you are qualified for the loan that you’ll need. The letter should state the purchase price, the maximum loan amount that you are qualified for, and the type of loan that you are applying for (Conventional, FHA, VA).

If you are offering cash, you’ll need to provide a copy of a financial statement (bank or investment account) showing that you have sufficient cash available. Your name must be printed on the statement, however your account number can be blacked-out.

All Offers Are “AS-IS”

When you make the offer you must be prepared to accept the property in its current condition – the bank will make no repairs whatsoever. Since it is seldom practical to perform a full inspection before one knows if the bank will accept the offer, banks typically give you 7 calendar days after your offer is accepted to inspect the property. If you are unhappy with the results of the inspection, you can cancel the contract for any reason within the 7 day inspection period. You do not have to provide a reason for cancelling.

This type of offer is ideal for out-of-state buyers because they can quickly submit an offer based upon photographic evidence of a property’s condition, then if the bank accepts the offer, travel to inspect the property personally and still have the ability to cancel the sale if the personal inspection is not satisfactory.

You Will Get A Clean Title To The Property

The bank is required to satisfy any delinquent taxes, liens, and unpaid association fees or utility bills prior to closing. You are given a title insurance policy that guarantees a clean title – the bank typically pays for this policy. (This DOES NOT apply to properties purchased at foreclosure auctions.)

You Will Not Have To Evict Anyone

The previous owners or any tenants are evicted by the bank before the home is listed for sale. However, in rare cases the previous owner had rented the property prior to the foreclosure. In Florida, leases must be honored by the buyer, so if the occupant is a tenant with a signed lease with, say, six months remaining, then you as the new owner must honor that lease – although you will be able to collect the rent as set forth in the lease. The bank is required to disclose if the property is subject to an existing lease so you’ll never be surprised.

Ready To Make An Offer?

Contact us before making your offer – we’re buyer’s agents and represent your interests, not the bank’s. We’ll help you determine the true value of the property by finding comparable sales, and we’ll find out as much as we can about the condition of the property. We can be your “eyes” if you are out of state and we’ll send you additional photographs of the property before you make your offer. Finally, we’ll draw up the offer for your signature, and since banks always sell foreclosed properties “as is”, we’ll include an inspection contingency in your offer that gives you time to personally inspect the property and to terminate the offer for any reason if you are not satisfied.