The Anna Maria Island Sun Newspaper

Vol. 11 No. 42 - August 3, 2011


Buying distressed properties

My mother was fond of using the expression "penny wise and pound foolish," which I always thought was interesting coming from a woman who would track department store dresses waiting for them to go on sale. But, as usual, mom was right, especially when it comes to purchasing distressed properties.

If you're thinking of jumping into the distressed real estate property market, you should know a few things before you take the final leap. First of all, what exactly is a distressed property? Basically these are homes that have either gone through foreclosure or are being marketed as short sales.

A foreclosed property is already in the possession of the lender, but a short sale is still technically owned by the homeowner. In the case of a short sale, the homeowner typically can't afford to maintain the mortgage, but the lender agrees to the sale of the property for less than the balance of the mortgage instead of actually foreclosing on the property.

Buying a foreclosure from a bank or lending institution can be faster than a short sale, since you are dealing with a motivated seller who wants to get this property and the expense of maintaining it sold as quickly as possible. Short sales can take weeks or months to negotiate offers, since the layers of lending institutions frequently involved in a mortgage process may not be clear. Also pricing on actual foreclosures is usually more aggressive than on short sales.

In addition, if you're looking for move in just bring your toothbrush condition, you can forget about finding that in most distressed properties. Many of these properties are in rough condition especially if they have sat idle for some time with minimal or no maintenance. Previous owners may have also taken fixtures and left properties damaged both inside and out.

Generally, lenders sell distressed properties in "as in" condition, and it is the responsibility of the buyer to verify the condition of the property. Because of this it is important for distressed property buyers to have a thorough inspection by a qualified home inspector or engineer. That being said, there are a large number of new condos in Florida that are also distressed properties. Properties like this could actually be in very good condition or never even lived in.

It's also not uncommon for title issues to be a problem with distressed properties. Liens from previous loans, unpaid contractor bills, taxes, utility bills and home owner association dues are among the issues that are common with homeowners who have not been able to meet their financial obligations. These are items that must be satisfied before a closing and can become a negotiable point between the buyer and the lender. Because of this attorneys and title companies both need to be involved in a short sale or foreclosed property transaction.

The bottom line is for you to consider if all of the potential problems and the property's condition really represent enough of a bargain to make you want to go forward. Sometimes the hype about distressed properties is just that. Everyone assumes it's a great deal, therefore, a lot of offers come in making the property more competitive than it should be.

Our battered real estate market has just as many opportunities for picking up a great investment as it has for headaches. If it looks too good to be true, it usually is. Just ask your mother.

Real Estate Transactions
Real Estate Transfers from July 1 to 15, 2011
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

07/11/2011 579,000 534,500 208 Periwinkle Plaza 1544 3BR/2.5BA SFR
07/11/2011 997,500 850,000 306 Poinsettia Road 3484 6BR/5.5 BA SFR
07/07/2011 889,000 825,000 410 Pine Ave. 2832 4BR/3.5BA SFR
07/08/2011 379,900 360,000 228 Willow Ave. VAC

Bradenton Beach

07/15/2011 189,900 185,000 105 S Seventh St. S. # B 900 2BR/2BA Condo REO/Bank Owned
07/15/2011 539,000 485,000 1101 North Bay Drive VAC

Holmes Beach

07/15/2011 225,000 200,000 600 Manatee Ave. # 225 1176 2BR/2BA Condo
07/15/2011 419,000 350,000 6604 Holmes Blvd. 1148 2BR/2BA Condo
07/01/2011 399,000 373,500 308 58th St. 1200 2BR/2BA Condo
07/13/2011 299,000 260,000 456 63rd St. 1071 2BR/2BA SFR Short sale
07/07/2011 595,000 545,000 612 Gladstone Lane 2051 3BR/2BA SFR
07/05/2011 334,900 315,000 213 58th St. 1337 2BR/2BA SFR
07/05/2011 399,900 360,000 2905 Avenue C 1556 2BR/2BA SFR
07/01/2011 299,900 275,000 458 63rd St. 1425 2BR/2BA SFR
07/15/2011 305,000 300,000 215 71st St. VAC

Source: Manatee County Property Appraiser’s Office

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