Buying and Selling Distressed Homes in Key Largo and Islamorada

The Florida Keys real estate market is challenging.  A distressed home can be an excellent investment opportunity but acquiring such a property requires a certain amount of specialized real estate knowledge.  Its equally important to realize that these homes impact those that are for sale with no distress in that they must "compete" with the available supply.  Here's a tip:  Keep an eye out for motivated long-time owners who have lots of equity - there are many such home buying bargains in Key Largo and Islamorada and we can help you find them. 

Buying foreclosure and "short sale" properties  There is a lot of interest in buying bank owned properties in the Florida Keys these days. A lot of information, some good and some bad, is floating around about the subject.   Often the information offered is for sale, with the promise that you can make a lot of money with little effort once you know “the secret formula”.  The fact is that there are no secrets, and to make money does require effort.  For your convenience, this site provides you a list of Key Largo Foreclosures and Short Sales.

What is a Short Sale?  Briefly, when the loan balance on a home exceeds its market value, the owner may apply to the lender to have the portion of the loan that is in excess of market value "forgiven".  The borrower will provide the lender personal financial data, a letter of hardship explaining the circumstances, market data from a listing broker, if available, among other things.  An important point to understand is that not only must the loan amount in relation to the property value make sense to the lender, but that is must be determined if the borrower qualifies for foregiveness.  The lender will gather all the facts and make an informed decision in weighing whether or not a short sale is preferable in lieu of foreclosing.  Short Sale contracts for sale are typically subject to the lender's approval and can require some patience on behalf of the new buyer.

What’s an REO?  REO stands for “Real Estate Owned”.  These are properties that have gone through foreclosure and are now owned by the bank or mortgage company.  This is not the same as a property up for foreclosure auction.  When buying a property during a foreclosure sale, you must pay at least the loan balance plus any interest and other fees accumulated during the foreclosure process.  You must also be prepared to pay with cash in hand.  And on top of all that, you’ll receive the property 100% “as is”.  That could include existing liens and even current occupants that need to be evicted.  A REO, by contrast, is a much “cleaner” and attractive transaction.  The REO property did not find a buyer during foreclosure auction.  The bank now owns it.  The bank will see to the removal of tax liens, evict occupants if needed and generally prepare for the issuance of a title insurance policy to the buyer at closing.  Do be aware that REO’s may be exempt from normal disclosure requirements.  REO home sales are often expedited more quickly than Short Sales.

Is it a bargain?  It’s commonly assumed that any REO must be a bargain and an opportunity for easy money.  This simply isn’t true.  You have to be very careful about buying a REO if your intent is to make money off of it.  While it’s true that the bank is typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a REO, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.  The bargains with money making potential exist, and many people do very well buying foreclosured homes.  But there are also many REO’s that are not good buys and not likely to turn a profit. 

Ready to make an offer?  Most banks have a REO department that you’ll work with in buying a REO property from them.  Typically the REO department will use a listing agent to get their REO properties listed on the local MLS.  Before making your offer, you’ll want to contact either the listing agent or REO department at the bank and find out as much as you can about what they know about the condition of the property and what their process is for receiving offers.  Since banks almost always sell REO properties “as is”, you’ll want to be sure and include an inspection contingency in your offer that gives you time to check for hidden damage and terminate the offer if you find it.  As with making any offer on real estate, you’ll make your offer more attractive if you can include documentation of your ability to pay, such as a pre-approval letter from a lender.  After you’ve made your offer, you can expect the bank to make a counter offer.  Then it will be up to you to decide whether to accept their counter, or offer a counter to the counter offer.  Realize, you’ll be dealing with a process that probably involves multiple people at the bank, and they don’t work evenings or weekends.  It’s not unusual for the process of offers and counter offers to take days or even weeks.

Wondering if you and your Key Largo home qualify?  Our goal is to assist you in selling your home before it reaches foreclosure.  Remember, not only must the property qualify in terms of loan amount in relation to market value, you must also qualify in the eyes of the lender.  Both the lender and owner will benefit by recognizing the situation and taking steps to come to a satisfactory resolution as early as possible. 

You are not alone!  The economy has affected many in the Upper Keys market.  Contact us immediately for a confidential consultation at no obligation to you.

How to get started  Contact Jim to find out about buying opportunities and selling strategies in Key Largo and Islamorada.