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THINKING OF BUYING A FORECLOSED PROPERTY?
Posted by V.K. [Mel] Melhado P.A. on Tuesday, December 8th, 2009 at 1:34am.
The lure of purchasing a 'short sale' or foreclosed property might seem highly compelling, but before considering such you might heed the old classic warning of Caveat Emptor or let the buyer beware. Because foreclosures are traditionally sold as-is, it is extremely important that you have done more than the usual due dilligence, especially here in South Florida. Known as R.E.O.s (Real Estate Owned), there can be many pitfalls that you need to avoid.
If you are purchasing at auction, it is imperative that you have inspected the property along with someone who is qualified to to render an opinion about the major equipment, such as the air conditioning unit(s). This sometimes can be extremely difficult becuses in many cases the power to the home has beenoff for a lengthy period of time. Here in Florida, you have to consider the possibility of the presence of mold in the walls or eslewhere, a hidden danger that can be expensive to remediate.
One of the issues that you will need to address before entertaining purchasing a 'short sale' or R.E.O. is that if you are financing, you will need to have your financing solidly in place before you begin to make an offer. You also need to be preparred to lose out to those buyers bidding with cash, because they will always have the edge.
Another thing to consider is that if you are bidding on a short sale or R.E.O., you need to be prepared to wait for a response from the lender. In the case of short sales, it can be an extremely lengthy process, while bank-owned properties will take less time.
All in all, it boils down to whether it is worth the potential headache of dealing with the distressed properties or is it possible to go out and find a bargain that doesn't fall into the category...We believe it is!
V.K. [Mel] Melhado PA
Downing-Frye Realty, Inc.
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