Foreclosure and Short Sale Success
Posted by Tim McCrory on Friday, March 12th, 2010 at 2:16pm.
Looks like we are finally going to see some warmer weather. This is welcome news. I'm not sure I've seen a winter this severe in my 21 years living on the Gulf Coast. Hope everyone is planning a Beach Getaway soon.
Before I discuss ways to be successful buying Foreclosures and Short Sales, here's a brief summary for 2009. There were 1,460 total foreclosures and 4,210 Notice of Default, the latter being a 168 percent increase over 2008. What's interesting is the dollar values. Total foreclosures amounted to $383 million and the Notices of Default have a market value in excess of $1.3 billion so there's plenty of Bank inventory coming in 2010. This appears to be grim news until you realize that in January alone over $114 million in property sales were recorded in Baldwin County. The market is finally heating up. The last three contracts I submitted were each met with competing offers so informed Buyers are taking advantage of distressed property values.
First and foremost, I believe anyone considering buying along our Coast should be actively IDENTIFYING which communities, developments, condominium projects or types of property investments that are best suited to their goals. Secondly, When targeting distressed properties it's vitally important to already have in place the means to purchase. Banks and Asset Managers require Pre-approval or Proof of Funds letters with the submission of any offers. Lastly, Be prepared to close quickly-no later than 30 days from acceptance. Why is this important?
Foreclosures and Shorts Sales are being targeted by savvy investors today so the importance of narrowing your focus to a select few properties that may be of interest is foremost. If we know for instance that you would like to buy a three bedroom condominium in Caribe Resort, I'm able to follow new listings, price changes, notices of default, go preview and generally address any issues needed to make an informed decision.
Next, Now that we know the WHERE it's time to know the HOW. New FHA lending rules have changed and getting financing has become increasingly difficult. Even with impeccable credit there are few lenders offering financing so it's necessary to start this process early. We've already established a target property list so knowing the amount necessary to fund the transaction is relatively clear. Now we can make contact with lenders or hold cash reserves so as to be prepared when that perfect buying opportunity presents itself.
SUCCESS-Since we've conducted the majority of our due diligence we are able to present an offer free of any contingencies prepared to close quickly. This may all seem counter intuitive but let's put the shoe on the other foot. As mentioned earlier the last three offers I've submitted had multiple offers. If you were in charge of the file for the Bank or Owner of a property trying to execute a Short Sale which offer would be more attractive. One subject to financing, inspection and delayed closing or one free of contingencies prepared to close almost immediately. Simple answer.
There is a perceived notion that the condo market at the Beach is overwhelmed with inventory but looking closer you'll discover otherwise. As of this writing there are only 35 Direct Gulf Front condo's built since 2000 on the market listed as Foreclosure or Short Sale. Of these 15 are Under Contract. This easily demonstrates that the best projects are in demand and short supply so following the steps outlined above and opening up a dialog now may be the difference in Success or Failure.
I'm reminded of the scene in Jerry Maguire when Jerry is admonishing his client to "LET ME HELP YOU-LET ME HELP YOU" then he follows this rant by stating "THEN I'LL SHOW YOU THE QUAN". QUAN=SUCCESS.
Let's get started.
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