Rojo, Home Buyer in Orlando International...

In a foreclosure, Orlando area, how is the selling price arrived at. I'm looking at a property, mortgage of 226K, assessed $106K on "short

Asked by Rojo, Orlando International Airport, Orlando, FL Mon Sep 26, 2011

list" $60K I'm a resident of BC, Canada and this would be an investment. Present owners would become tenants.
Who pays closing costs in a f/closure? If property taxes are outstanding, is the buyer responsible for them?
Who is responsible for the balance between present mortgage and selling price?

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Ed Beck’s answer
IF this is a foreclosure, there is no mortgage amount, because the bank owns the property and the bank doesn't have a loan on the property. The prior owner's mortgage means nothing, it is gone (along with their credit). IF this is a foreclosure, the present owners are the bank. IF this is a foreclosure, the property taxes are not outstanding, because the seller (the bank) has (likely) paid the taxes up to date and will convey the property with clear title. IF this is a foreclosure, the buyer will pay his/her closing costs. The ASKING price is determined by one or more broker price opinions performed by local realtor assigned by the bank, and usually accompanied by an appraisal. The SELLING price is determined by the highest price a ready, willing and able buyer will pay for a property. It's also the lowest price the seller of that property will accept. Lastly, the lender can sue the former owner for the deficiency of the mortgage if they wish, which would have nothing to do with you as a purchaser of the foreclosure.
If your questions were in reference to a short sale, then my answer means nothing to you. You mentioned foreclosure several times, and never mentioned short sale.
0 votes Thank Flag Link Wed Sep 28, 2011
The present owners cannot become the tenants, if you don't want to go to jail. In Foreclosures, since the original owner is in default, the buyer pays the closing costs, and the property taxes as well. Unless the original mortgagee got a settlement letter from the lender, the balance will still be the responsability of the original owner/mortgagee. You can get good deals in short sales, but for one, you need to make sure you get a clean title when you buy the property, and that can become an issue. NEVER ever, negotiate with the owners that they will be the tenants. Lidia, agent/investor with Florida Realty Investments, Mercado Florida, member of IRC, and CFRI
3 votes Thank Flag Link Mon Sep 26, 2011
Is this an MLS listing or something you found in the "gray market" as I've no idea what you mean by "short list"? The first problem with your plan is the present owners will not be allowed to stay in a short sale, which is what this sounds like. If it's truly bank owned, then it would depend on that bank's policy. Scott's given you a good quick summary of who pays what.
1 vote Thank Flag Link Mon Sep 26, 2011
Hi Rojo,

Be very careful about what you are getting involved in. You say this is a foreclosure however it sounds like a short sale and if that is the case the current owners cannot stay in the property. Please consult a US real estate attorney on this one so you do not get into any kind of legal trouble.

I would also strongly suggest you work with a Realtor to help you find the right property for you whether it is myself or another qualified agent.

Thank you,

Katie Sweet, Realtor
Watson Realty Corp.
1 vote Thank Flag Link Mon Sep 26, 2011
There are differnt types of listings, auction where the buyer pays everything, foreclosure or reo which the bank clears all liens and back taxes, the buyer pays their own closing costs and then tehre is short sales where everything is negotiable. Having a buyer broker from teh area that can assist you and guide you through the buying process is a must, it will save you time, money and aggravation.…

Please see my blog for tips and advice on buying a bank owned home
Web Reference:
1 vote Thank Flag Link Mon Sep 26, 2011
Hey Red,

I've closed short sales where the lender pays the back due HOA/condo fees and also the property taxes so that is not a hard and fast rule that a buyer will pay those costs on a short sale.

Also there are some scheisters out there engaging in mortgage fraud to try to make a fast buck. What they do is hide offers and have an insider attempt to convince the lender that the house is worth a lot less than market value. Some will even go to the extent of providing overpriced/falsified repair estimates, too.

It wouldn't be worth buying one of those flips because even if you're purely innocent, you will still have to hire an attorney to prove your innocence if the FBI or other Regulatory body sees the "flip" transaction on public records and decides to go after you along with your realtor, the seller and the listing agent and the "insider investor" that did the flip.

Good luck!
0 votes Thank Flag Link Wed Sep 28, 2011
Lidia gets my vote, she told you exactly how it is.
0 votes Thank Flag Link Tue Sep 27, 2011
The short sale means by definition the mortgage is greater than the sale price. In most cases the bank forgives that discrepancy. If they don't the seller is the responsible party.

When a property is closed all expenses are brought current including taxes. the seller pays theirs and you will be responsioble fort he future expenses only.

The prices are arrived at based on the current value in the area. but that doesn't mean the bank must accept that. The purchase is a detailed process where your agent gives you a good clue as to how low you can go on your offer. and reasonably get the home.

Short sales can be great deals like foreclosures but you must evaluate them independently...same as foreclosures... not all of those are great deals. As a general rule I would avoid the former owners as the renters as there are often some hard feeling s from them. It is best to let them move on and get a new tennant.

If you need help feel free to call on me. I work a great deal with foreign investors and the distressed sales.

Ken Anderson - Broker
Short Sale Certified
ApexOne Realty, Inc
0 votes Thank Flag Link Mon Sep 26, 2011

Until/If a preforeclosure short sale owner/borrower is approved (has a financial hardship) and the price is approved (lender will do their own independent appraisal), the listing price is pure fiction.

If the assessed value is $106k it's probably not likely to appraise for less than $120k. Short Sales are not always a "good deal".

The true bargains are bank owned listings that you can actually buy at (or probably will have to offer more if it's underpriced) the listing price and close within 30 days.

Short sales are supposed to be an "arms length" transaction so if you rent it back to the owner, you may go under an FBI investigation for possibly defrauding the lender.

So, don't waste your time on short sales if you are not planning to spend at least 6 months in Orlando "shopping for homes" and waiting and waiting and waiting...

All the best,
0 votes Thank Flag Link Mon Sep 26, 2011
Scott's 2 answers are spot on!
First you'll need to choose a local agent that can sort through all of the mess.
Between you and your agent you can find some pretty incredible properties out there for investment.
And of course every situation is different!

Thanks for asking!

Carol Bauza
Keller Williams Advantage II Realty
0 votes Thank Flag Link Mon Sep 26, 2011
Assessed value has nothing to do with what it is really worth in todays market. In a short sale the seller is responsible for any "shorted" amount, their bank could wrote it iff or seek to collect based on their financials. A local agent is best to answer questions on specific properties, if you would liek a referall tio a couple of agents i work with in the area who could help you, just let me know
Web Reference:
0 votes Thank Flag Link Mon Sep 26, 2011
Start by selecting a good Realtor in your purchase zip code. He/She will direct you from there.
0 votes Thank Flag Link Mon Sep 26, 2011
Your situation requires consultation with several professionals. First a financial planner or accountant should be on board regarding not only your acquisition, but also the consequences should you choose to sell this property later. If you do not have a USA issued tax identification number, FIRIPTA is something you absolutely need to know about.

You will need an experienced real estate professional able to represent you in the acquisition of the short sale or foreclosed property. Additionally, you will need the real estate professional to review with you the purchase addendum that will most certainly come from the bank. This addendum will identify who is responsible for paying what and who has liability for what. This is a very important document to understand.

It would work best to work with a real esate professional in Orlando.
Best of success.
0 votes Thank Flag Link Mon Sep 26, 2011
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