March 13, 2010 by Henry Reedman
What to know about Florida foreclosures and short sales can come in handy in these trying and fiscally-challenging times. Florida is an extremely populous state, and much in the way of home ownership and investing in properties occurred through much of the 90s and well into the first decade of the 21st century. It wasn’t until late 2008, though, that the bottom fell out of the market and the foreclosures began to build up.
Reasons for this sad state of affairs down in Florida are varied, of course. Like much of the country, many people were investing in short-term turnarounds where a property would be bought (and either improved or sat on for several months) and then sold for a tidy profit. In many cases, these investors were taking the property and obtaining loans on it to invest in another property, which is known as leveraging.
The whole process is known colloquially as “flipping, ” and the times were good for “flippers” for quite a while. Unfortunately, many had no business in the market and were completely unprepared when property values began to slide precipitously. They were caught out with not enough money in reserve to now sit on a property for maybe years and with no hope of earning enough income to meet obligations in the short and long terms.
Of course, it was inevitable that these investors and even the average homeowner, who’d bought a property on a short-term adjustable rate or “interest only” mortgage with the expectation that they’d be out of the home with a profit before their payments adjusted upwards, would be caught in a vise of their own design. Their monthly payments skyrocketed in some cases, and banks began to act as banks do with poorly-performing mortgages; they foreclosed.
Many homeowners and flippers have begun looking at trying to get out of these properties through a process known as a short sale, which can actually be a viable alternative to a foreclosure, if the lender is willing to allow it. If successful, they can avoid a very hard hit to their credit scores, and lenders will at least get some money out of the property rather than none if it’s foreclosed upon.
Basically, this sort of sale is undertaken with the permission of the lender. It can allow a homeowner to sell his or her property for whatever the market can provide, even if its several thousand (or maybe much more than that) less than what’s owed on the property by the owner. The bank takes the sale price paid and usually forgives the difference. Currently, there are many, many homes up for short sale in lieu of foreclosure in the Sunshine State.
FL foreclosures and the rate at which properties in this most populous of southern states have been falling into this state can make up a significant portion of the real estate activity in certain markets in the state, especially around the really big cities. An investor or a buyer looking for a good deal may want to consider checking out homes offered by “motivated” buyers offering a short sale on their property.
What to know about FL foreclosures and short sales can come in very handy in these trying and economically-challenging times. We’ve got the best inside scoop on fl foreclosure properties.
