Some fact about real estate foreclosures. In Broward County, Florida and for 2013,
there were 16,406 sold single family homes out of which, 1,994 were foreclosures.
1,202 were sold to cash buyers, 453 houses were sold to real estate buyers getting
conventional loans, only 235 foreclosures were sold to FHA real estate buyers. There
were only 13 closed sales sold to VA buyers.
Watch the video, and read on below to find out how foreclosures work, and what does
the information mean to you.
FHA and VA does not allow leaky roofs, properties without kitchens, without a/c’s, mold,
and properties in with general disrepair. Because of this reason, almost 80% of all real
estate foreclosures will be sold to buyers paying cash, and buyers getting conventional
Typical Terms for Broward County Real Estate Foreclosures:
Each bank/lender works a little differently, but they all have similar terms. When thinking
about buying a foreclosure, these are typical terms you should expect:
For 2013, most real estate foreclosures in Broward County will sell above asking
price. The average percentage for the asking price vs. sold price relationship is
99%. This means that out of all the foreclosure sales in Broward for 2012, if the
bank was asking $150,000.00 for the house, they got $149,000.00
Before making an offer in a real estate foreclosure, we must check if there are
multiple offers, and the closed sale value of the home. The offered price should
be in relationship to those two factors. Nine out of ten times they would have
About 63% of all Broward County real estate foreclosures sell cash, around 20%
conventional, and the rest FHA. If you need closing costs, the most banks
contribute is 3%, but now days this rarely happens. VA purchases are less than
1% of all REO sales. Properties are sold to the highest and best bidder, best
being cash, then conventional, then FHA.
The maximum most Asset Managers (bank employees negotiating the sale) are
authorized to go down from asking price is 5%. Only properties for sale that have
been in the market for a very long time, are overpriced, and have not had any
offers will be sold for less than 95% from asking. Management approval is
required for those transactions, and approval may take weeks.
The best time to get a foreclosure with an FHA loan is between November and
March. The rest of the year is almost impossible to be the highest and best
bidder with an FHA loan (too much competition–too many offers)
Your offer on a Broward County real estate foreclosure should always be your
highest and best offer. The price should be the highest price you are willing to
pay for it, so if you lose the house, you do not get upset. Banks counter to the
highest and best offer ONLY. Banks don’t play games during the negotiation.
This is not going to sound good… but if the Bank tells you to jump, you jump. You
have to get your ego out of the way if you want to get a Bank foreclosure.
Due to condition, a substantial amount of properties are not eligible for FHA
You must be APPROVED for financing, and quite often with their own lender,
before they even submit your offer to the bank. If cash, you must submit proof of
Proof of funds could be one of the following:
A letter from your banking or brokerage institution indicating you have assets
that equal or excedes the asking price.
A bank statement showing your name and balance (don’t forget to black out your
Almost always, you have to use the Bank’s closing company and escrow agent.
You are buying as-is. What you see and what you don’t see is what you get.
Banks don’t do repairs (normally)
Most of the time, if you are the highest and best bidder, you get an answer within
one or two days. However, if you have not heard from the bank during that time,
it means that within seven to 14 days you will hear that someone else got the
property. There are no updates once the offer has been received.
Most banks negotiate one offer at a time. When they are ready for your offer,
you must give them an answer right away, or they move on to the next offer.
You will get “free and clear” title, unless otherwise disclosed in writing. Because
of this reason, closing dates often need to be extended to clear title issues.
Just like with any other house, although more prevalent in foreclosures,
properties may have City Code violations. You will assume all responsibility, and
they will become “your problem”.
If you do not agree with the above terms, you should not be looking at
foreclosure sales, as they don’t negotiate their terms.
What offer will win the house?
When dealing with foreclosures, you don’t only have to be the highest offer, you also
have to be the ‘best”. They will counter to you with “highest & best.” We know about
highest, but which offer will be the best?
Since the Bank dictate the terms, cash or the type of financing will determine which
offer will be the strongest, and most likely to close. See below and find out where you
are in the food chain:
From strongest to weakest:
63% +/- Sold to Cash contracts
20% +/- Sold to Conventional loans
14% +/- Sold to FHA–Buyer paid all of their own closing costs
3% error reporting
Just a thought: Terrific deals are normally 3% of all listed property. Looking at the
above table, who do you think is snatching those great deals?