Foreclosure “Trick or Treat”

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In Miami, as in other cities with such a large number of foreclosures, there is much to be aware of when purchasing a bank owned or foreclosure property. Yes, buying a foreclosure is not for the feint of heart, so here is a general guide to common foreclosure tricks and treats -

Foreclosure Tricks:

• The purchase price it too good to be true – The bank may have priced it below market to create competition and buyers will artificially bid up the price, and/or the property may require significant repairs or renovations.
• The seller or bank offers to pay for your owner’s title insurance policy if you work with their assigned title agent – This may save you a couple of thousand dollars, but you still have the right to hire your own title agent that will consider your rights, concerns and needs.
• You call to inquire about a property and are informed that it is a ”multiple” offer scenario - Do not let this dissuade you from submitting an offer, all offers must be presented to the seller.
• I will get a better deal if I work with the listing agent – This is a shortsighted approach as most listing agents are acting as mere transaction coordinators and have no duties to you as a buyer. Find your own real estate practitioner to represent your interests.

Foreclosure Treats:

• The initial asking price of a foreclosure is significantly above market value - Don’t make the common mistake of waiting for the price to become attractive. Submit an initial offer to the seller and they may counter-offer you.
• In general, those properties that receive the least amount of interest have issues  and require the biggest discounts – If you are willing to complete major repairs or improve a property, you may be in a good position to negotiate a significant discount to the original asking price.
• There is a considerable amount of fallout, so monitor any property that you wish to purchase, even if it goes under contract -  There are many purchasers out there just looking and making blind offers. It is not uncommon for a property to have two or three contracts in place before it actually closes, in particular when looking at properties over $200,000.
• Cash is King - Sellers prefer cash offers and are more aggressive when negotiating the purchase price if your contract is not subject to financing or an appraisal.

Are you looking for a Miami or Miami Beach investment property at a deep discount? Are you looking for a discounted short sale or bank owned property? Ross Milroy of Miami Angel Properties, LLC may be reached at 305-673-5300 or info@miamiangelproperties.com.

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