5 Facts You MUST Know Before Buying a Bank Owned Property Near Disney in 2009
The Orlando vacation home market has changed drastically since the beginning of 2009. The inventory has been going down (Finally!) buyers are coming out of the wood works and buying holiday villa property close to Disney World and 90% of all the properties listed on the market in Kissimmee and Davenport under $200,000 are bank owned or short sale right now. With all these new factors coming into play it’s time to shift your 2008 buying mindset to today’s reality of the market. If you’re serious about successfully purchasing a bank owned property in Orlando for your vacation home than read on and take notes because believe it or not there’s feeding frenzy going on out there and it’s better to know now then when you get outbid on the home of your dreams.
1. The Bank Says: “Show Me The Money!”
Are you paying cash or taking out a loan on your Orlando home? Cash offers always hold more weight with the banks than offers contingent upon financing. You should also know that most condominium communities in Orlando right now are not even qualifying for financing due to low COA delinquency rates. If you’re buying a second home in Orlando, especially as a foreign national, then it’s best to liquidate any assets you may have first to free up the cash to buy because mortgages on second homes are not easy to get right now. This will also allow you to earn more of an income when renting out your piece of Orlando real estate.
2. Multiple Offer Situations On The Rise
Take it from me, I do this everyday for a living and am way too busy for hype, almost all bank owned foreclosure properties in Davenport, Kissimmee and Clermont (zoned short term rental) under $200,000 have multiple offers on them. Why? This is simply because the banks are generally pricing the properties so low right now that it’s attracting so much attention creating bidding wars on the properties. The last three bank owned properties in the Disney area I sold all went for over full asking price. My clients were being outbid at full price and this is happening everyday! So don’t be fooled by the 2008 nay-sayers that are claiming you can pick up a foreclosure for 20% below market value. They are right but not entirely, the Orlando area bank owned properties are already listed 20% below market so even at full price they are a bargain.
3. Highest and Best Offer
Are you willing to pay full price or more because if you’re not there are about 10 other people who are and will and the bank knows this. You will get outbid and have wasted your time trying to bargain with the bank. They don’t need to bargain with anyone in this market and it’s unfortunate but true. If by now this is starting to sound like the boom again you’re finally catching the point. This is a boom, it’s a foreclosure boom and it’s real. The bank is not going to counter offer on your low-ball offer. What they do is collect 5-10 offers at a time, request that you send in your highest and best and they pick the best offer. Case closed. No second chances so make sure that whatever you’re willing to pay in the end for the house is your first and final offer because it’s the only chance you will get at it. Have your Realtor pull comps and if you see that the home is listed below or at the same price as the lowest comp in the neighborhood than consider it already a bargain, if you try to play games with the bank they will simply not play back. They don’t have too they are too busy for it.
4. Prices are Going Up Not Down
Over the past two months I have been watching the prices of properties in the Four Corners Disney areas slightly increase and the inventory decrease. This is a very good sign for sellers but what this means for buyers is that if you are waiting around for prices to drop you’re just a couple months too late. Prices in Kissimmee and Davenport have hit rock bottom and though I do not think they will drastically rise anymore than they have anytime soon I do strongly believe that they will not be going down anymore. There is too much buyer activity right now and more than enough inventory to keep buyers busy for a while. So if you have been waiting to buy a foreclosure in Orlando now is the time. For example, in Legacy Dunes Condos in Kissimmee last month there were four bank owned condos available in there for under $30,000. Those condos had so many offers on them it was ridiculous and they all sold for over full price thus now all the one bedrooms coming on the market in Legacy Dunes are at the lowest of $35,000 as of yesterday. So those that waited will now be paying an extra $7-10,000.
5. Bank Addenda-Love It or Leave It
If your offer does get accepted by the bank (congratulations) you will be required to sign off on the 14-36 page addenda that basically takes every right away from you that’s in the FAR/BAR and backs you into a corner. I don’t mean that you are going to get taken to the cleaners (that’s not possible when you are getting such a great deal on a home) but you will definitely NOT be the one calling the shots so don’t waste your time trying. The bank will say, i”If you don’t like what’s in our addenda than don’t sign it. We will move onto the next guy”. It is what it is. The banks generally will only pay up to a portion of the title expenses despite if the county policy is for the seller to pay. The banks will choose their title company and all of the bank title agencies I have worked with are a living nightmare so you can expect things to go bumpy (at best). The title companies will generally tack fees onto your closing (good luck getting them removed) and until the bank signs off on the addenda and contract you sent in, they can continue to accept other offers (and if higher than yours you have to start all over again) so it’s a good idea to have your attorney on speed dial to review your documentation right away and get it back in as soon as possible. It can take up to 5-7 business days to receive an executed copy of a contract back from the bank all the while other offers are coming in.
In closing I want to say that though I have brought up all the negative factors and not sugarcoated the process but the one thing you should know is there are alot of very happy people in Kissimmee and Davenport that have purchased the vacation home of their dreams from the bank and paid much less than retail priced homes. I have many happy clients that would do it all over again if they had to just to get the same fantastic deal on the home again. The bank owned buying process is 5,000% better than the short sale process (so you can imagine what a nightmare a short sale can be) but it’s definitely a good idea to have a buyer’s agent representing you when purchasing bank owned property and not work directly with the selling agent because they strictly represent the bank and DO NOT have your best interests in mind. Some of their title companies will not even speak to you regarding the closing documentation and will request that you get your own attorney. They will not cut you a better deal because you are working directly with their selling agent and they most certainly will not choose your offer with them over another that is with a buyers agent. They will take the best offer period. It’s in your best interest to work with a Disney area vacation home Realtor who knows the area and how the banks work. It does not cost you money to have a buyers agent as the bank pays for this service.