Foreclosures are for cash buyers!

I hate to beat a dead horse, but… each day we get folk calling in on Orlando condo conversions – foreclosed – that cost under $50K – and they want to finance them. When we tell them it will be very difficult, we get the “Oh that’s not a problem – I have a great credit score and good job” line.

But it’s not about good credit scores any more, or even how much you put down in many cases. It’s about whether the condo is FHA approved or Fannie Mae approved; whether it’s has less than 50% owner occupancy, or whether the association is more than 30% delinquent in HOA fees, or whether the condo in question has been blacklisted because of it’s zip code, or any combination of a myriad of factors that seem to change each week.

“But seriously, I have a great credit score!” they insist.

Turn on the TV!” I holler. At which point they usually hang up in disgust.

Ouch.

Things sure ain’t what they used to be.

So let’s get it out in the open. When it comes to bank owned Orlando condos, especially condo conversions that are going for about 35c on the dollar, here’s the scoop:

  • You need to pay CASH in most cases to be in the game – because no one’s going to give you a condo loan until the credit crunch eases – especially if you’re a foreign national – and especially on condo hotels.
  • You need to put down a decent deposit to show the bank that you’re serious.
  • You need to submit evidence of that cash (proof of funds) with your contract – because without it, the bank won’t even look at your offer.
  • Understand that at around 35c on the dollar, the prices your seeing are not usually up for negotiation. These are not short sales. If you want it, offer the full price, or a little more – because the best deals are getting multiple offers and the bank will pick the best of the bunch, i.e. a full price, cash offer with a decent deposit and a 30 day closing.

Think I’m kidding? Try one. With the number of foreclosures flooding the market, we often see 4-6 offers from interested parties – and the banks will only play ball with serious buyers who know what they’re doing.

The Orlando foreclosure market isn’t a place for people who are just looking. It has become both competetive and fast paced. If you don’t know what you want, or you can’t perform, you’ll get short thrift from the banks and become frustrated quickly.

If all of this had made sense to you, and you’d like help with securing one of these deals – get in touch and we’ll lead you through the maze. You could find yourself with equity the day you close!

Fore more info see our dedicated Orlando Foreclosures page.

16 Comments

  1. Buyers don’t get it. They’re alwlays behind the curve. When they say ‘no problem’ you know it’s a HUGE problem. Those deals never close. They think they know a whole lot more than they do. And we have the internet to blame for that.

  2. Even at 35c on the dollar, why would anyone want to pay all cash for a condo that NO lender will ever consider financing? Sure it sounds “cheap” now, but if it’s in a bad neighborhood (black listed zip code…neighborhood will most likely get even worse in the future), over 50% investor-owned (virtually every condo conversion in Florida fall into this category), and/or has an association that’s 30% delinquent in HOA fees(the dead-beat owners aren’t paying the HOA dues so the common maintenance/landscaping stops getting regular attention and HOA fees are continuously raised for the few owners who do pay). When will the Orlando condo market ever turn out to be a “good” deal?

  3. Craigg, lenders might not want to touch them right now, but that doesn’t mean they won’t get creative again in the future. Or, if there’s money to be made, then someone else will move in and fill the gap.

    As for putting down all cash, why not? At 35c on the dollar, these places cashflow nicely with a renter. And if you only paid $45K for a 2/2, you’ll surely be able to sell it again in the next 3 years for at least $60K? That sounds better than 2% in a savings account to me.

    And if these are snapped up then the COA will be replenished and delinquency rates will fall again as the inventory is re-absorbed. The real losers are the folk that over paid 2 years ago and will probably be upside down forever.

  4. Sir
    I am an Indian national.
    It has come to my knowledge , through a friend of mine living in orlando that there are some properties may be condos or apartment are for sale under bank foreclosure for around 20000 usd on cash deal which have rentable value of arounf 900 usd .

    If any such thing is available, you may please contact me on my given mail id.
    I am willing to buy 2 properties on cash immediately , no bank loan required,

    Raman Seth

  5. With a redemption period of two years for local county tax deed sales here in Florida, I wonder how many of the properties that haven’t sold, have now reached a tax deed sale, and how many have liens on them from the HOA?

    Considering that all liens, apart from HOA liens (amongst others) are wiped out at a tax deed sale, this could cause the opening bids to be substantial.

    However, it would certainly be lower than what an investor would pay at a foreclosure sale don’t you think?

  6. Thanks for the info. Wonderfully interesting. I am beginning to study the market in Utah. Just beginning to get into real estate. Lots to learn.

  7. I find it amazing how truly ignorant most people are of the real estate foreclosure crisis we are facing in this country and how little is being done to correct it.
    Your blog is spot on and your honest conversation was refreshing. Keep up the good work.

  8. Yea cash is king right now. I’m a real estate wholesaler in Tampa Florida and when I get a call from a FHA buyers, I, without realizing it, start sounding sadder.. LOL.. I guess subconsciously I know that I cant really do anything for them. I tell them that if I here anything i’ll give them call but I haven’t been able to call one yet. I have a lot of cash buyers though..

    One good thing about FHA though, If you get your hands on an fha approved house, you can make a lot more money because you have to sell the home for more. Sometimes close to 90% of market value. I usually look to sell homes at 50 cents on the dollar so if I could sell a home at 90 cents on the dollar and not take up months of my time, then I’m all for it

  9. I am a cash buyer who wants to purchase a bank repo condo, Why do realitors want you to jump through the hopes so much???

  10. Walter, it’s not the Realtors, it’s the seller, i.e. the bank. They have many hoops for you to jump through, but it’s worth it in the end. You will need at minimum proof of funds, a deposit check and some patience. Without them, it just can’t be done I’m afraid. See our foreclosure page for more info. There are 2 videos at the bottom of the page that should help you get to grips with the whole thing.

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