There are multitudes of homes and commercial properties all over the country that have been foreclosed upon and are now sitting empty. Drive through any neighborhood and chances are you will come across a block that has maybe one or two houses still occupied among a sea of foreclosures and REO properties. If you are looking to take advantage of these great buying opportunities, you need to make sure your investment is solid and this means making sure the house you choose is not overpriced. 

Many of today’s foreclosure and REO properties are in great move-in condition.  It is easy to fall in love with a house whether it is to raise your family, flip or to serve as a rental.  The trouble is, what may seem to be an unbelievably great price, could actually still be overpriced.  It is important to exam all your options before you make a deal on any house and buying REO properties or foreclosure properties are no different. 

How do you tell if you are looking at an overpriced REO or foreclosure property? Well, fortunately, the keys to knowing the right price are similar to buying a conventional home.  The tips for getting to the right price include:

•  Comparing recent home sales in the neighborhood. How long have houses been on the market? Did they sell for what was being asked or did the price drop before it was sold?
•  Checking public records of recent sales and foreclosures. Are there other homes in the process of being foreclosed?
•  A professional appraisal is always a wise move and worth the expense.
•  Drive through the surrounding area. You can tell a lot by how well other homes are being kept.
•  Visit with potential neighbors as you’re in the neighborhood. Ask about the activity in area for the past few years. This will give you signs of what to expect from the market for that area in the future.
•  Make sure you consider things such as all maintenance, warranties, taxes and insurance. Are there Property Owner Association dues?
•  Considering your house payment, utilities and other set monthly expenses, can you afford major expenses that come with owning a home? Repairs that may come about can be costly and unexpected.

With housing prices still all over the place in this country, some areas have started to see recovery in their local economy, while others are still waiting to hit bottom. Regardless of your motivation for buying a property, make sure you check all your information and make an informed price buying decision.  Just because you are willing to pay the asking price doesn’t mean you are getting the best deal on a property.  Make sure that you aren’t paying an inflated price and ask yourself if this property will hold its value so that you can recover your investment.

Even before 2007, the housing market started to head in a totally new direction and since 2007, the changes have been swift and dramatic.  If it has been three or more years since you dipped your toes in the real estate pool, it would be in your best interest to catch up on all the happenings and changes that will affect buying Florida real estate.

Be aware right now that the prices are low.  Today’s Florida homes for sale are selling well below what they were three or more years ago.  It is this decline in home values that has lead to the upside down mortgages plaguing the state.  You can find even lower prices on Florida REO properties, Florida HUD foreclosures and Florida VA foreclosures. 

At the same time, lenders are tightening their lending practices to prevent future market crashes.  It is important to exercise due diligence to find the right financing that fits your financial situation.  The loan you took out 5 years ago probably won’t be the same loan you take out this year.  This is especially true of flexible ARM and interest only loans.  Interest rates are also lower right now and buying a few extra points to lock in a low fixed interest rate for the next 30 years is a good idea.

The part that most people aren’t aware of in today’s Florida real estate market is that sales are going up.  You are definitely not the only person who is going to go out there and take advantage of these rock bottom Florida home sale prices.  Some areas of Florida are already showing a 30% increase in sales over last year.  You have to realize that although the market is overwhelmed with bargain properties, there are still buyers out there eating it up and if you want to get in on the game, you have to start today.  Prices will start to rise again.

Florida REO properties make up a huge portion of Florida homes for sale in today’s market.  Short sales and foreclosures are right up there too.  Don’t discount Florida HUD homes and other types of foreclosures too.  So if you want to take advantage of even lower prices and you have the credit to do so, you should definitely consider buying Florida REO and Florida HUD homes from agents that are experienced and authorized to handle such purchases.  These type of transactions require a clean credit history and solid down payment, but are well worth the investment.

Most sellers depend on their realtor to provide a market analysis and idea for an asking price before listing their home on the MLS, but is there any benefit to getting an appraisal completed before putting a house on the market? Many sellers prefer to wait and have the buyer foot the bill for an appraisal as they are required by most lenders to do and most appraisals must be completed by random third party associates.  Pre-home-sale appraisal? If you can afford it; do it.

Many experienced realtors will recommend a current appraisal at the start of the selling process. They will usually have a professional home appraiser to recommend as well.  Getting an appraisal provides an unbiased and equally informed opinion about the "retail" value of your property.  A professional appraiser has tools and information available to them that enables them to give you an accurate estimate of what your home is worth. 
A home appraisal will help to ease doubts you may have in selling your home. Remember when you decided to hire your realtor you got a representative for your home who would know how to market your home to prospective buyers? By getting an appraisal done before you place your house on the market, you are hiring someone who has no binding interest in the property, but can provide a truly unbiased and unemotional number to concentrate on.  An appraisal not only helps you set a price, it is information that prospective buyers will appreciate having as well.

A professionally performed appraisal will get you closer to market value for your home. You don’t want to wait for buyers to tell you what they think your home is worth.  By opting for a professional appraisal you will already know what your home is worth. The money you’ll pay a professional appraisal is small in comparison to the price you’ll get when your home is sold at market value. The thousands you could make on the sale are well worth the few hundred you may have to pay.  That is of course, if you can afford to pay at before the sale. 

With the headaches of selling, buying and moving, it is worth the money you’ll pay a professional appraiser for one less thing on your list to worry about. Pre-sale home appraisals are a requirement, but can often help give your home sale the dollar direction it needs to be a success. 

A short sale occurs when a home owner who is having trouble making their mortgage payments will ask their lender for special consideration to accept less than is owed in order to sell the home quickly and to avoid foreclosure. This keeps a foreclosure from tarnishing the homeowner’s credit record while also keeping the property off the bank’s inventory. If a bank denies a short sale, the homeowner often ends up losing the home to foreclosure and, after an unsuccessful foreclosure auction, the property becomes a REO or real estate owned property where ownership defaults to the lender.
 
Regardless of whether a short sale or a REO sale occurs, statistics show that values naturally decline on properties where the mortgage has gone into default. To this point, most borrowers in financial troubles are unlikely able to keep up with necessary maintenance on the property. Since short sale properties are sold much faster and often without hitting the MLS or costly foreclosure auction block, banks are more apt to accept a reasonable short sale offer than to refuse.  Generally lenders see less loss financially when dealing in short sales, but also get more marketable and often profitable properties out of REOs. 

To help the economy get jump started again the first time buyer tax credit was established. It has in fact caused a frenzy of activity, which brought on the Home Affordable Foreclosure Alternative program, otherwise known as HAFA.  The purpose of this program is to streamline the short sale process although some questions if HAFA is going to cause more headache and trouble for an already troubled industry.

HAFA has created standardization of short sales and deed in lieu of foreclosures. This is one definite benefit to having HAFA in place as it eliminates the wide range of agreements that vary from situation to situation.  A benefit for borrowers is that lenders are now required to standardize their approval criteria for short sales and deed in lieu sales. With this practice in place, borrowers can now have a better idea if an offer will be accepted and exactly what the offer being accepted means.

The HAFA program is part of the federal Home Affordable Modification Program (HAMP). The small print that many aren’t aware of is that borrowers must have applied for a HAMP loan modification before they are able to be accepted for a HAFA streamlined short sale approval. This alone will lower the number of HAFA required short sales.

Lenders that participate in HAFA are required to forgive the loan deficiency if the borrower is approved for the short sale. This goes against most lenders’ standard process offering debate about which lenders will fall within the HAFA mandate.  With the debates and questions regarding HAFA, many do not see HAFA shortening the short sale process any time soon.

Short sales seem to be picking up right now. But, in the end, will the current REO system be a better way to alleviate these troubled loans? Not every parcel and bid will qualify for the terms of the lender’s or HAFA’s new shorter short sale process.  In cases where a short sale is not the best option, lenders will be forced to institute a foreclosure. Accordingly, an effective REO disposition process must be maintained by mortgage lenders.   In any event, everyone benefits from a timely process which retains as much value as possible in our homes.