MIAMI AREA FORECLOSURES
HOW TO BUY A FORECLOSURE
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Just Because It's A Foreclosure Doesn't
Mean It's A Great Deal
Real Estate Owned (REO) properties in Miami can seem like an attractive purchase but you need to understand exactly what you're getting before you buy them. These types of properties are often owned by lenders such as banks, credit unions, mortgage companies, and other businesses.
With an influx of foreclosures in the Miami area, lenders are ending up with real estate property they don't want. That has some buyers seeing a prime opportunity to either get into the real estate market for the first time or to bolster their real estate portfolio.
REO vs. Pre-Foreclosure
Under most laws, when the property is still in the pre-foreclosure and auction phase, the lender/bank is only entitled to its losses and expenses but not to a profit from the sale of the property. That changes when, following foreclosure, it becomes Real Estate Owned property by the lender or bank.
Surrounding Yourself With Professionals
Can Minimize Your Risk
Buying an REO can be easier than purchasing a pre-foreclosure home or buying it as a Short Sale. Buying REO properties can be a good investment but also a bit tricky. It's important not to jump right in without first knowing exactly what you're getting into as there can be added risk involved. It's important to employ the right experts to assist with your purchase.
A Realtor can run a report to show you comparable sales and let you know if the foreclosed property is selling for a good price. If the property is at a great price you should understand why it may sound like an incredible deal. The problem is there are some risks because most REOs are sold AS IS.
It's Key To Know What You Are Buying
Just as with traditional home sales, this is why an excellent home inspector is a must. It's critical to know how much of a margin you will need to budget for the property. Have that home inspector check everything out. Know the potential added costs of fixing things up, rehabbing the property, and so you need to make sure you go in with some additional cushion (a little extra pocket change) to fix up that property.
Patience Is A Virtue
REO properties also vary from traditional home resale properties in the length of time it takes to buy one. You have to have a little more patience. You make an offer and sometimes it takes a little bit more time and that's the difference between an REO purchase and buying from a homeowner. The homeowner may give you an answer overnight, while the bank-owned property, sometimes could take several days because it has to get approved by several people at the bank.
Finally.....Do Your Homework
Before the REO property is sold, lenders will typically take care of the removal of tax liens and evict occupants if necessary. In general, most REOs are free of title-related issues but you still should research any possible code violations as well as a title search on the property. Make sure you also request an appraisal.
If you have the patience, the right attitude, and experts on your side, you may find an REO property is exactly the deal you've been waiting for.
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