Tampa Palms, Westchase, Carrollwood and Tampa Bay Real Estate News From Jeanne Prigitano

I heard a recent statistic that 53% of all homes sold in the Tampa Bay area in the last quarter of 2010 were either short sales or foreclosures. With that many on the market, there are many questions by both buyers and sellers about foreclosures. Although every case is unique and sometimes my best answer is “I don’t know”, I thought I’d try to answer some of the more common questions about foreclosures.

1. How soon will they foreclose on a house after mortgage payments have stopped?

The legal process can start in as little as 3 to 6 months. I have seen the first notice going out in about 6 months and in a few cases actually completed in 7-8 months. Typically, however, the actual foreclosure, eviction, and bank turnover is much longer. JP Morgan Chase indicated that the average borrower in Florida who loses a home to foreclosure has not made payments in 22 months.

Again, every case is unique and different. Please don’t assume that you will be able to stay in your home for 2 years without making a mortgage payment. Keep track of all notices from the lender and respond promptly to any questions the bank asks of you. Also keep in mind that a short sale is usually preferable to a foreclosure. Don’t stop making your payments as a strategy to live free. You could be out sooner than you think. Use it as a time to regroup and get on your feet and possibly work with the bank to rework your payments and stay in your home. Last, but not least, don’t stop paying because you feel the house is not worth it but you can still afford to pay. The banks will eventually find out and there may be consequences (see previous posts).

2. If I buy a foreclosed house will I have to pay off any liens? Will I get clear title?

There could be some cases that are problematic, but buying a foreclosed home should provide you with clear title. When the bank forecloses on a house, the liens are paid and clear title is achieved. In order for the bank to sell, they must be able to provide marketable title. In Florida, most closings are done by Title Companies. Make sure that the title company will insure title (title insurance policy) and that you are issued a warranty deed. Foreclosed home purchases are usually “cleaner” than buying a house at auction on the courtroom steps. In those cases, the buyer is responsible for all liens and it could end up costing a lot more than the purchase price.

3. Won’t I get the best deal if I buy foreclosed house?

Not necessarily. Houses sell at market value. With so many houses in foreclosure, market value has been established using short sales, foreclosures, and sales with no special provisions. The bank, when establishing an acceptable price on a foreclosed property, will sell it at a price that the market will support. Sometimes foreclosed houses are listed for a lot less. That is usually because of its condition. In some cases, appliances and/or AC units are missing, pipes have been ripped out, and power and water are shut off. In general, if they are priced much lower than other houses in the neighborhood, the condition is poor. Usually, banks will not pay for any repairs, whereas non-foreclosed sellers will negotiate on repairs in order to complete the purchase. Foreclosed houses can be great deals, especially if you are handy. Just make sure you have considered all associated costs.

If you are thinking about buying a foreclosed house or think that you may be heading for foreclosure, give me a call. I can help.