Should I Buy a Foreclosure Home?

 

Video Summary

Should you buy a foreclosure home? Well, homes that have been foreclosed upon are usually held by a bank. Well, you may want to buy it because the price is right; because with this real estate market, there’s a lot of bank-owned property. One of the problems with buying bank-owned property is the addendums they put on contracts. The contracts exclude the bank from any liability as far as the condition of the home, particularly if it had any particular latent or hidden defects. Of course, the big one is sinkholes.

You would need to do a very thorough job of having the property inspected to make sure it was not a prior sinkhole home. If it was, it’s almost impossible to get these engineer’s reports to determine whether or not it was repaired properly. And that will impair your ability to insure it, where if it was an unrepaired sinkhole home, you’re not going to be able to get insurance on the property, or you won’t have coverage even if you do. The insurance company may decline coverage. There’s any other number of other problems in buying these – physical problems with the property.

It would be to your benefit to hire an inspector to thoroughly inspect the property, make sure there are no sinkholes, make sure everything’s in working order –especially the roof– so you know what you’re buying and you don’t wind up buying a pig in a poke. You also need to look at the title and keep in mind that these contracts, or the addendums they put on bank-owned property, say that the bank can get out of the contract for any particular reason, and so it’s problematic. You don’t have absolute certainty, particularly if they discover that they’ve got some title problems. Well, they’ll say, “I’m sorry. I can’t close because we found that we didn’t do the foreclosure right,” or whatever, and they cancel your contract, which makes it very frustrating.

So, those are some of the pitfalls or things that you need to look out for if you’re going to buy foreclosed property, particularly from a bank, which is usually who you’re buying it from. The addendums are almost as long as the contract and they just exclude the bank from any liability as to any problems with the property, and you have no recourse. So, the advantages are that you usually get a super-good deal. The downside is, you’ve really got to do your homework and investigate the property, and also investigate the title to make sure they’re not going to back out at the last minute and that all the liens are cleared up.

Another big pitfall, particularly in this area, is unpaid utility bills. Many times, the utility company has a lien against the property, particularly in the Gulf Harbors, which was formerly Lindrick, or the Aloha district, which is now Florida Government Utility Association, and they will not give you utility service unless you pay the past-due utility bill. So, you need to look out for that. If you’re buying property in a Homeowners Association, you need to check and make sure that there are no past-due Homeowners Association dues or Condominium Association dues if you’re buying from a bank-owned or foreclosed property. If you’d like representation concerning a purchase of foreclosed property, give me a call at (727) 847-2288 and I’ll be happy to represent you. Thank you.

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Should I Buy a Short Sale Home?

 

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Should you buy a house that is going to be short-sold, or a short-sale house? Well, short sale means that you are purchasing the property for less than what is owed to the lenders, whether it has a first mortgage and a second mortgage or just a first mortgage. Well, you need to do your homework whenever you’re buying a property that is in a short sale. The owner of the property is the one who enters into the contract, and then there’s an addendum that says that this contract is contingent upon the lender approving the sale.

So, it is not that you’re purchasing it from the lender; you just need to have the lender approve the sale. They usually go through the process of sending out someone to look at the property, which is called a BPO – a brokerage price opinion – to determine that the price that you’re paying is about what the property is worth, to approve the sale. This takes some time, and you have uncertainty whenever you’re dealing with short sales in that you don’t whether the lender’s going to approve it. It takes sometimes months to determine whether or not the bank will approve it; if they take other contracts. You don’t have any certainty that they’re going to approve your deal, and so you need a healthy dose of patience.

Once the bank does approve the short sale, then they want to close yesterday, or give you a very short time period. This presents a problem if you’re going to go through a bank or FHA in order to finance the home. You can start to process and get it all ready to go, but you don’t have an approved contract. So, then your appraisals and all the expense involved as far as getting financing is concerned may be outdated by the time they approve the contract. Or, if you turn around and wait until your contract is approved, they’re going to want to have the transaction closed within a 30-day period, which may present a real problem as far as getting your appraisals and everything done by your lender in time to close on the short sale agreement.

So, you have a lot of uncertainty in dealing with short sales, although you usually get a very good deal. Remember, though, that you need to do a good job researching the property because the person who’s selling the property probably does not have the money to pay you for any damages you might be incurring as a result of their failure to disclose any defects about the property. So, you should have the property thoroughly investigated as far as that’s concerned. So, if you’d like representation in conjunction with a short sale, please give me a call at (727) 847-2288. Thank you.

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What is an Amortization Schedule?

 

Video Summary

An amortization schedule shows how much of the payments are principal and how much are interest. You usually receive an amortization schedule when you sign a promissory note and it’s usually connected with a mortgage. Each payment remains the same and is paid at the same time, usually monthly, as far as your monthly payments are concerned. The initial payments on a regular payment schedule include a whole lot more interest in their first payment than on their latter payments. For example, if you have a $100,000 promissory note and the interest rate is 6% and you want to pay this over a period of 30 years, the payments are $599.56 a month. The first payments are going to be all interest and then the last payments are almost all principal. So that’s the definition of an amortization schedule, where you have a constant payment which is payable usually monthly and can be annually, quarterly, or whatever but you have a regular periodic interval and it’s the same amount every month. And the schedule will show how much of the payment is interest and how much is principal and it assumes that you make the payment on the due date every month.  So if you have any questions about an amortization schedule or about owner financing, which is usually when we produce these, give us a call at (727) 847-2288. Thank you.

 

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How Can I Set Up a Trust for my Grandchildren?

 

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You can set this trust up in your will and that’s called a testamentary trust for your grandchildren. Another way to do it is just set up a living trust, also called a revocable trust, and provide for your grandchildren in a revocable trust or your living trust. However, if it is for a very small amount you may want to consider setting up something on the Florida College Prepaid College Program and there is another way to set this up so the grandchildren receive the account when they are age 21 by setting up an account in your name as custodian under the uniform transfers to the minors act and the account is held until such time as the minor reaches the age of 21. And if you pass away they can petition to have another custodian appointed such as your child or you can put it in their parents name to hold for them until they are 21 years of age. If you would like to do a trust or some estate planning for your grandchildren give me a call at (727) 847-2288.

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What is Involved in a Tax Deed Sale?

 

Video Summary

 

I’ve received a question about what is involved in a tax deed sale from a recipient of our newsletter.  The tax deed sale starts back whenever they issue tax certificates and you purchase a tax certificate.  That is done on an auction type basis and it’s a reverse auction. So if you bid on a tax certificate for whatever the taxes are on a particular piece of property and no one bids against you, you get it at an interest rate of 18 percent.  If someone is bidding against you, well, they bid 17 percent and then you can bid 16 percent, all the way down to I guess 0 percent as far as bidding for the tax certificate.

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ce you acquire the tax certificate, you hold it until such time as the owner pays you in full for that, or after there have been two tax certificates or two years when the taxes have not been paid, then either one of the tax certificate holders can apply for a tax deed.  And when you make application for the tax deed, all back due taxes have to be paid.  Now sometimes you see a situation where no one really wants to step up and pay these back due taxes so you may have three or four years’ worth of back taxes before someone applies for a tax deed. Once you apply for a tax deed and you pay the back due taxes, the clerk then does a title search to determine who the owners of the property are and who the mortgage holders are, and then they give notice to the owner and anyone who has an interest in the property and tell them that the property is going to be auctioned off for the back due taxes.

 

 

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he taxes, once the auction takes place, are bid on a dollar amount and the bidding starts at the total amount of the back due taxes.  So if no one bids at the auction, then whoever has paid all these back due taxes on the tax certificate receives the property or certificate of title, whereas if there’s a third party bidder or someone else bidding, then the amount continues to go up and any amounts above what was owed on the back due taxes is paid out to the owner of the property as their interest.

 

 

The only time that the value comes into play as to the value of the property and how it might affect your bid is in the event it’s someone’s homestead property.  In that event, the statute provides that you have to bid a certain amount, a certain percentage, which I don’t have right off the top of my head to tell you what percentage of the assessed valuation is if you’re going to be purchasing someone’s homestead property for back due taxes.

 

 

The successful bidder under a tax sale will receive what they call a certificate of title. Once you receive the certificate of title, then you’re the owner of the property. However, if you want to sell the property or obtain a mortgage on the property, you’re not in a position to do so because you don’t have what they call marketable title and you may have to go through a suit to quiet title and be able to clear the title.  At Waller & Mitchell, we offer that service for a flat fee of $1,500.00 plus the cost, which would run somewhere between $500.00 and $1,000.00.  Another way of clearing the title is if you hold the title that you received from the clerk’s office from the tax sale for four years, you may be able to avoid having to go through the suit to quiet title, as far as that’s concerned.

 

 

So that’s how you go about a tax sale: you have to go through the process of obtaining a tax certificate and having at least two years of tax certificates issued before you’re able to apply for a tax deed and then there’s an auction that a third party can come in and big more than what the taxes are.  You don’t have the ability to force anyone to pay the taxes, so your money’s tied up until someone applies for a tax deed or the owner decides to pay the back due taxes.

 

 

If you have any more questions about the tax deed or you have one that you want the title cleared, give me a call at (727) 847-2288.  Thank you.

 

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