Destin Florida Foreclosures and Short Sales | Sandestin | Santa Rosa Beach

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DESTIN FLORIDA FORECLOSURES AND SHORT SALES - THE BASICS

A short sale is an attempt for a borrower (seller) to avoid a foreclosure by selling their property for less than the amount of the loan.  The borrower (seller) will request that the bank forgive the deficiency on the mortgage and the short sale is less damaging to the borrowers credit score than a foreclosure.  Banks are often open to this because it can cost them less money in the long run than the foreclosure process.  The borrower must show the bank that they are unable to pay their note and many banks will not even discuss the short sale until the borrower is past due. 

In a short sale, the borrower (seller) can place the property on the MLS “multiple listing service” for any price they like but that does not mean the bank will accept the offer.  The ”undervalued” short sale creates a false and deflated value and often a disappointed buyer because the bank, after their analysis, declines the offer.  If you work with agents that understand the short sale process, your chances of success will increase dramatically.  I have completed many short sales and they are some of the best buying opportunities available.  The short sale process can easily take 90 - 120 days;  therefore; a buyer needing a house today may not be a good candidate for a short sale but most importantly the bank may decline a full price offer because the seller (borrower) priced the property too low.  If a buyer has time to kill, a short sale can work, but if it seems too good to be true, it probably is.  I have seen situations where the short sale sold price “final price” is more than the actual listed price.  I think it is important for buyers to understand this process to avoid frustration and wasted efforts.  I have also seen many successful short sales take place, but they were priced correctly and it took time for the bank to review and accept the offer.  An ideal short sale situation is the “pre-approved” short sale.  The pre-approved short sale price and terms have been worked out with the bank prior to the sale and these can be done quickly.  Every bank has a different policy when it comes to short sales, therefore, the results can vary from bank to bank. 

If you are a borrower in a situation where short sale or foreclosure advice is needed, I strongly recommend that you consult with an attorney.  This will be money well spent.

On the other hand, the purchase of a REO (Real Estate Owned) property is a faster strategy.  The REO property is bank owned and past the foreclosure process.  Most REOs are priced aggressively and offer the ability of an inspection and a quick closing.  The list prices are real and one making a good offer with solid funding should be able to close the deal.  Currently there are many more short sale properties on the market than REO properties but this will change as the banks begin to hold more and more property.  REO properties are in high demand and you will likely find yourself competing with savvy investors in multiple offer situations.  A great realtor and a good strategy are needed to be succesful in the REO market.

Another mistake that many purchasers make is ruling out traditional properties that are not in the short sale or reo category.  You may have a seller that has owned the property for many years with a low cost basis or you may have a seller that can afford to sell the property for less than owed without involving the bank in the sale or “Short Sale”.  Many buyers make the mistake of ruling out these opportunities.  This is where the benefit of having a realtor comes into play.  A good realtor understands the market and can advise you on the best opportunities.  Please check out my website at BrokerClayton.com and let me know if I can help you in any way.  I have worked in real estate on the Emerald Coast of Florida for over 10 years and have a great understanding of Destin, Sandestin, Miramar Beach, 30A, Santa Rosa Beach, WaterColor, WaterSound, Rosemary Beach, Alys Beach, and Seacrest.  I service Okaloosa and Walton Counties.

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