Florida: are foreclosures the best deals?

Tuesday, January 29, 2013

Florida: are foreclosures the best deals?

Florida is leading the US property market's recovery and interest amongst UK property hunters remains high.

But whilst refreshingly transparent, the US real estate market is also very different from the UK's and the unfamiliar processes and new terminology can be bewildering.

What are the different types of property on offer and what are their pros and cons? Here, British-born and Sarasota-based realtor Patricia Tan provides some helpful pointers to get you started in your Floridian property search.

"Remain open to all four types of property until you can firmly establish relative values and your main buying criteria," counsels Pat Tan.

Foreclosures. A property that has already been repossessed by the bank which held the mortgage. In many areas the bank will list the property for less than its fair market value and accept multiple offers in what is in effect a blind auction environment. The buyer has no opportunity to negotiate the price, and disclosures (from the seller) about repairs and defects to the property are not available. When a bank cleans up a property prior to sale, it may cover up defects - or may not clean it at all. Thus buyers should have an attorney acting specifically for them when purchasing a foreclosure, and they should check title and debts on the property, or unpaid HOA fees.

Short sale. When a property sells for less than the value of the mortgage, and the owner cannot clear the mortgage balance. The mortgage company must approve the contract and sale, and this may involve lengthy negotiations between the buyer, seller and mortgage company. For the buyer who has plenty of time, a short sale can be a bargain - often less than foreclosed properties. Unlike foreclosures, the price can be negotiated. Occupied by the owner, they may be in a better state of repair than foreclosures, and come with disclosures on the history of the home. You should also use your own attorney to check for title defects.

Resales. A used property not subject to additional lender approval as with a short sale. Usually have full seller's disclosure and in better condition than short sales. In areas saturated with short sales and foreclosures, resales may well sell for the same sort of value.

New homes. Always a popular option, these may or may not be listed on the MLS (multiple listing system) that includes the above three types of property. A good realtor will know all the new-builds in his/her local area, and save time for an overseas buyer on a tight schedule. There are two main advantages to buying new: the 10-year warranty - and low repair costs; and the fact the buyer can choose finishes. You must always check the track record of the builder and check comparitive values in similar neighbourhoods. Know what builder incentives and discounts might be on offer - can you negotiate?

For more information on buying in Florida and properties for sale there, click here.


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