There is an increasing amount of interest domestically and worldwide from investors who would like to buy Orlando real estate for pennies on the dollar. Itâ€™s equally clear that most donâ€™t have the first clue how the banks operate, although many like to act as if they know what theyâ€™re talking about, particularly when it comes how they intent to finance the deal.Â Here are a few tips to get you on the right track.
Rule 1: Donâ€™t waste your time (and everyone elseâ€™s) by asking to look at homes â€“ foreclosure or otherwise – until youâ€™ve figured out how youâ€™re actually going to finance the deal.Â WhenÂ asked if youâ€™re pre-qualified for a loan, too many say something like â€œNo, but trust me – it wonâ€™t be a problem.â€ Whenever I hear those words, I know for sure there IS going to be a problem because it tells me that person hasnâ€™t turned on the television or read a newspaper for the past three years and doesnâ€™t realize weâ€™re in the middle of the biggest credit crunch since the 1930s.
Newsflash: Condo financing disappeared more than 3 years ago. If youâ€™re looking for an Orlando condo foreclosure, particularly a condo conversion under $100K, mortgages are virtually unobtainable, and if you donâ€™t have the ability to pay in cash, then you wonâ€™t find many Realtors willing to show you anything at all.
As the tagline for The Apprentice goes, â€œItâ€™s not personal. Itâ€™s just business,â€ Â and in todayâ€™s market, you need more than a good down payment and decent credit score to get a loan onÂ most condo projects or foreclosures. The truth is, banks couldnâ€™t give two hoots about your credit worthiness since theyâ€™re no longer focused not on you, but on the risk involved in the community youâ€™re buying into. If itâ€™s not FHA approved (and few of them are FHA approved in Orlando (and Florida in general), then it has to be cash all the way – and has been for the last two years. Even in those communities where you could theoretically get a loan, the banks are receiving multiple offers on their foreclosure inventory â€“ and theyâ€™ll always take a cash buyer over someone who needs a loan.
Sound harsh? Perhaps. But if youâ€™re in the under $100K price category, you must first understand and accept that itâ€™s actually a sellerâ€™s market in Orlando, and then it will make sense. With less than six months of condo inventory left, and up to a dozen offers on every bank owned Orlando condo foreclosure that comes out, it also means that more than ever before â€“ cash is king. (If youâ€™re in the $150K bracket and over, you can breathe a sigh of relief. You probably still wonâ€™t get a loan on an Orlando condo, but you could conceivably get one on a single family home foreclosure in a subdivision like MetroWest.)
Rule 2: If youâ€™re sure that youâ€™re a cash buyer, then your offer must be accompanied by a proof of funds. If youâ€™re lucky enough to be getting a loan, then that contract needs to be accompanied by a pre-approval letter from the bank. No exceptions, no delays. If youâ€™re shy about disclosing your financial status, stop reading right now.
Rule 3: The bank is calling the shots. If you find a bank owned property you want, then you better be prepared to submit a contract on it immediately and be prepared to close in double quick time if your offer is accepted. If youâ€™re slow to adhere to bank timelines, the system will often reject your contract automatically. Contrary to what you may have heard, the banks arenâ€™t playing around. And nor should you.
Rule 4: Inspections on foreclosures are usually for your information only. Distressed sale homes tend to be sold â€œas is, where isâ€. That doesnâ€™t mean you shouldnâ€™t have the home inspected, you probably should since you may still be able to back out if the home is a disaster. It just means you canâ€™t go running back to the bank and ask for a discount if you donâ€™t like the quality of the carpet. Not gonna happen.
Thereâ€™s more you should know before you dive in, so if youâ€™re serious about investing in bank owned single family homes, townhomes or condos in Orlando (including downtown Orlando condos) then give us a call on 407-290-3408 (or email Info@CondoMetropolis.com). Weâ€™ll run you through the entire procedure from start to finish, then, once you know the rules of the game, you can decide if you still want to play!