bank foreclosures Archives - Fort Myers Real Estate and Homes For Sale

Like anything else, buying at auction can be a good deal, or a rotten deal depending on what you buy and what the terms are. While there can be upside at an auction sale, the downside is much more frightening and should never be attempted without proper advice and education.

Each month we see big auctions advertised on billboards, newspapers and such touting bargains. I’ve attended several auctions and I’ve learned many things. In this article I’ll attempt to educate you on some of the things to watch out for that you might not know about.

Is Buying at Auction a Good Deal?

At one auction I noticed a group of people in front and another group in back. One group kept bidding up the property to prices higher than market value and I wondered why. Later on I discovered that when they won the bid for some reason they didn’t finalize a contract and the property went back out for re-bid. This happened as many as 2-3 times per property. At the end of the night when the crowd had thinned the property was purchased for much less by an investor who really wanted the property. Essentially it was off the market all night tied up in contract sessions.

Another thing to look out for is reserve versus absolute auction. An absolute auction means the property will be sold to highest bidder no matter what. If it’s reserve, you never really know what the reserve is and they try and negotiate with you after you’re awarded the winning bid, so be prepared.

If you’re buying a condominium, or even in a homeowners association for that matter, I would look not only at the property, but also the association. You may purchase and be the only one paying condo or HOA dues. This may also make it impossible to sell your property to anyone but a cash buyer as lenders will not lend if the association doesn’t meet certain requirements.

Many are surprised to learn that the title work isn’t sufficient to actually sell the property. Some have learned they may need to file suit to Quiet Title after they receive what they thought was good title to property. There is a difference between insurable title and marketable title, and title policies today can exempt many things leaving you the purchaser holding the bag.

The property may also have many defects that aren’t known or get lost in the shuffle, and the buyer inherits them. At one particular auction I’ve attended, once you put down your non-refundable deposit, you lose it regardless of whether you cannot get the mortgage (even if they promised to give you one at the auction) or if the property has major defects. You simply MUST inspect the property beforehand or you will most likely be surprised afterwards. I saw one home when the back half of the home was missing, and the buyer lost their deposit of 10%. Additionally, if the air conditioner gets stolen prior to closing or damage occurs to property between auction and closing, it’s the buyer’s responsibility, so you are taking All the risks.

You also want to research code enforcement liens, fines for improper permitting, etc. I had a house listed in Cape Coral with about $70,000 in fines, and a lot in Cape Coral with over $90,000 in fines by code enforcement. We recently sold a $20,000 lot in Ft Myers with over $200,000 in fines. In each case we rectified the problems before closing or didn’t close at all in the latter case, but this would not be true at an auction as the buyer would be stuck assuming those fees.

I attended one auction whereby the winning bidder put down their 10% and agreed to finance the unit through the bank at the auction. They were approved on the spot for financing. The problem is the property did not qualify because too many people weren’t paying their dues, and the loan was denied on that basis. The new lender was the same lender selling the property at this foreclosure auction. The lender obviously knew the property did not meet FNMA guidelines but they sold it to a buyer obtaining financing anyway, and in fact approved their loan. The buyer was astonished to learn that after being approved, they were later denied, and their escrow deposit was being retained by the seller (the bank) for non-performance of the contract.

Like we said in the first paragraph, sometimes a good deal isn’t a good deal when it’s rotten. You must thoroughly investigate the property, the association, the contract, the market, the financing, and the title work before you bid or you run the risk of being let down later.

If everything checks out to your satisfaction upfront, we would also encourage you to set limits on what you’re willing to offer so you don’t get caught up in the moment and overpay, only to find out later it doesn’t appraise and your loan is denied and deposit forfeited, unless of course you’re a cash buyer and don’t mind paying too much.

Like anything, an auction is just another way to buy and sell, and no matter which vehicle you use, please be sure to work with professionals and do your homework upfront. You’ll be glad you did later. Happy house hunting!

One of the biggest frustrations buyers have is offering on a bank owned foreclosure and not getting it. As a listing agent for many of the banks, sometimes buyers call me wondering why their offer wasn’t accepted, so I decided to write a 20 best tips on how to get your offer accepted.

The first thing buyers must understand is there is a lot of competition for these homes. Typically bank foreclosures go fast, and for over asking price. Everybody seems to want them. So structuring your offer and submitting it correctly will increase your chances.

Keep in mind, listing agents must have all the required information, so if they ask for something upfront, they mean it. Listing agents don’t have time to track your agent down for this info. We attach a document to each MLS listing specifying what is required with the offer.

Tips on Buying a Bank Foreclosure Chart — How to Buy a Bank Foreclosure Chart

The reason is, the bank never sees your offer until one is accepted. The listing agent must enter information into and online submission, and it must conform to what the bank asks for, and all fields must be filled out. If a foreclosure has 20 offers, the listing agent doesn’t have time to call 15 agents and beg for information they required upfront. Keep in mind, it takes awhile to upload 20 offers, and the listing agent may be dealing with 20 properties.

Listing bank foreclosures is very time intensive, and the listing agent coordinates everything from repairs to working out HOA fees, title issues, code violations, etc. Providing the required information is the first step.

Secondly, consider that you’re probably competing against other buyers, and that many will be above asking price. So how do you compete? Consider a higher escrow money deposit, shorter closing time, and definitely a shorter inspection period. Bank asset managers are also gauging the strength of each buyer, so you want to put your best foot forward in hopes of getting the property.

In many cases banks will counter multiple offers with highest and best. Buyers are shocked when the bank doesn’t and just accepts one offer, so it always pays to pony up early on and go for it. If you do get a highest and best form, assume the other buyer wants it as bad as you do, and act accordingly, because if you don’t, chances are you won’t end up with the home.

Be careful that your offer is written well and clearly states all fees and costs. It is difficult to impossible to make changes later, and it could cost you the home. Any change to contract later on opens up possibility home goes back out for rebid and you could lose it, so it pays to write offer correctly the first time. Same applies with names; make sure everyone who wishes to take title is on contract from beginning. You may not be able to add names until after closing, which could require new title insurance and additional fees.

These are some very useful tips by an experienced foreclosure agent. Each bank has their own rules, so be sure to follow directions well. Make sure you’re working with an agent who understands contract language. Many times we see financing contracts that don’t match up or specify some costs buyer is not allowed to pay under the buyer’s financing program, and the offer cannot be presented to bank until language is cleaned up which could cost the buyer the sale because of delays. Be sure to work with an agent who has experience writing clear and concise contracts and understand financing in and out.

Bank foreclosures are prevalent in Fort Myers, Cape Coral, Bonita Springs, Estero, and Lehigh Acres, so following these tips will increase your chances, and ignoring them will most assuredly have you scratching your head wondering why the bank selected another offer. Good luck and happy house hunting.

Search all Lee County Florida single family home foreclosures on MLS.

Search all Lee County Florida condominium foreclosures in MLS

A few years ago we reported that listing agents were listing homes at ridiculously low prices to create buying interest simply because the home was being sold as a short sale. This is a bad practice for several reasons, and yet we’re seeing it continue today.

Misleading Short Sales Distort Actual Values — Misleading Values in SW Florida Real Estate

This past week I noticed two different homes, each located in a different subdivision, listed at far below actual values. This can cause many problems we’ll outline now.

The bank is not likely to accept a short sale on either of these homes. The bank will learn the actual value by ordering a BPO (Broker Price Opinion) or a bank appraisal. Once they determine the home is worth much more, typically they just kill the sale. Many owners and agents mistakenly believe that banks typically counter, but this isn’t normally true, especially when the offer is far below value. There also can be more than one lien holder involved, and both look into value, and either one can kill the sale.

If the banks were to accept such a deal, it creates a potential tax event or larger deficiency judgment against the seller. The bank could also ask for a promissory note against the seller, and that note would be significantly larger due to the under valued sale.

Even though the deal is not likely to be accepted, it also hurts the market in two other ways. Buyers mistakenly believe that artificial number is the new market, because they saw a home for sale for X amount of dollars, even though it has no chance of selling. Some buyers act quickly to tie it up, then wait months to find out the answer is No. All the while, some good bargains have come and passed and they’ve missed out. They may not have been the Steal they thought they were getting, but they were good bargains and suited their needs.

In addition to the misperception buyers have, banks must also make decisions on how to price foreclosure inventory. They do look at sold comparables, but they also look at what is on the market. If they’re not careful, they’ll notice a particularly low priced sale and price theirs too low, which has a domino effect on future foreclosure properties, and it snowballs from there.

The artificially low listing can influence future sales if people aren’t paying attention. The foreclosure process is far from perfect, and people from other states typically make decisions about local property, so there is no need to give them false ammunition for fear they may shoot themselves in the foot with it. When they do this, it hurts the entire market.

The market will go up and down as conditions dictate, but it need not move in a direction due to false hopes and misinformation. Sellers need to do a better job interviewing agents, and agents need to insure they know the local market, understand the short sale process, offer advice commensurate with what market conditions dictate. This can be challenging I know in a changing market, but we see False Listings everyday and it doesn’t help anyone.

The seller is let down when the bank rejects and it goes to foreclosure, the bank wastes time investigating a False Listing, and the buyer mistakenly believes they’ll end up the proud owner of a steal; all the while great bargains pass them by in the process. And the market is let down by false and misleading listings that really shouldn’t be on the market.

If you missed last week’s Future of Real Estate Show, you can tune in now. We interview Lee County Sheriff Mike Scott and ask him tough questions about Florida’s and Arizona’s immigration law and how that affect what he does. Additionally we ask him his views on controversial red light cameras, the upcoming tight budget process, school resource officers, the jail, traffic stops, and much more.

It’s been a little while since we released the official SW Florida Real Estate Current Market Index. This index accurately predicts the near term forward direction of the local real estate market by analyzing current market activity against inventory levels and assigning a value. A lower index level indicates a hotter the market, and a higher number indicates a cooling market.

Current Market Index-Southwest Florida Real Estate — Ellis Team SW Florida Current Market Index

As you can see, the forward indicator heated up in February and we witnessed strong sales since that time. We have noticed a slight cooling trend since May. As we write this article official numbers haven’t been released yet, but we have spoken with several agents and loan officers who have also indicated a cooling trend since May.

At 4.94 the index still boasts very strong numbers; however the trend has been rising lately so we’ll want to keep an eye on it. One reason the market has cooled a bit is because bargain based foreclosure property inventory levels have fallen off which has cooled buying demand. SW Florida has been a price sensitive market and buyers are off the fence and buying because they perceive real bargains. The looming question has always been what will buyers do when the real bargains begin to dry up?

We have heard reports that banks will be unloading more foreclosures to the market soon, and already we are seeing that. Banks are not filing new foreclosures at the pace they once were, so we wondered how this could be true. The answer may be that the banks have not released the entire inventory they foreclosed upon in the past few years.

To give an example, we just pre-listed a bank foreclosure we’ll be bringing to the market soon. From the time an agent receives a pre-listing it can take 1-6 weeks or so before property is ready to bring to market. Several reports, valuations, and decisions must be made, and in some instances repairs, water hookups, etc before the property is ready for market.

This particular property had suffered some fire damage. The bank of course wanted a fire report from the fire department once they learned this new fact. Keep in mind, the banks don’t know what they’ve got on their hands until the appraisal and agent reports inform them. We obtained the fire report and determined the fire occurred back in 2007. It’s obvious the borrower has not lived in the property since 2007, and presumably hasn’t made a payment on a damaged property they weren’t living in.

So the question is, if the buyer wasn’t making payments, why did it take from 2007 until now for the bank to foreclose and/or bring the property to market. The bank is just now discovering there was a fire over 3 yrs ago in the property.

The answer is either the banks have held back inventory, or have just been too busy working their backlog. So just because foreclosure filings have been down in the past year doesn’t mean there couldn’t be more ready to hit the market.

In addition to the banks we’re dealing with, we’ve also been working on FNMA listings. We’ve been told by various sources to get ready for an influx of FNMA properties as well, and already we’ve been assigned several pre-listings.

Banks have been more diligent on short sales, but they’re still not quick enough. Short sale closings have been rising, but they’re still a drop in the bucket compared to the struggling homeowners out there.

With short sale closings rising, and the possibility of more bargains hitting the market, we could see the index drop again, but for now it is rising and we’ll want to monitor. Nationwide sales have slowed, so it’s not just a SW Florida trend. We’ll be watching sales volume and pricing trends closely in the coming weeks and update you.

Tune in to The Future of Real Estate Video Show.

We’ve been compiling our annual State of the Market Report which will be released soon and this year more than any other some interesting trends are developing. Full time agents tend to get caught up in the deals they’re working on and could miss some of the major trends developing in the overall market. It is always so interesting to analyze the overall Lee County real estate market, and then dissect down to the smaller sub-markets and see what story the data conveys.

This past week I asked several full time agents who work with a lot of buyers if they could tell me what they’re seeing on a day to day basis. I then compared what they said with the data we’re compiling to see what they story is.

A few themes developed from their stories. The first theme is many buyers have heard Florida is on sale, so they come down here with unrealistic expectations about what they can buy. Agents are receiving unrealistic requests for things like gulf front homes or condominiums 1 block from the beach with a garage, built in the 2000’s for $100,000 or less, or waterfront gulf access homes, 3 bedrooms, 2 baths, built in the 2000’s for $150,000 or less. The stories go on and on.

Many buyers want to look at bank foreclosures, but they don’t want to do any work if it needs repair. They expect all homes should sell at the bank foreclosure prices regardless of whether they need work or not. Many buyers feel the foreclosures set the prices in the neighborhood even though they may be missing a kitchen and needs tens of thousands in work. Buyers are quite often dissatisfied with the condition of the distressed properties, but they don’t want to look at a regular home that is all fixed up because it is not a perceived bargain.

You could take two identical homes next door to each other, one being a foreclosure and needing $15,000 in repairs and another being a normal sale and in excellent condition. The bank foreclosure might be priced $15,000 below the normal home, but when the buyer sees it they’re turned off. They’re also turned off by the price of the normal home because they feel it should be priced $15,000 lower. Many times there is a reason a foreclosure is less money. It takes money to fix them up, not to mention time and effort. Not everybody wants to do that.

Another theme is buyers have no idea homes are selling as quickly as they are. Many buyers are looking around and because there is some inventory believe they have time. Many are not motivated to pull the trigger because they believe that home, or one just like it will be on the market in 6 months or next year. Buyers do not believe these homes are receiving multiple offers and being scooped up by investors who can actually cash flow them at these low prices.

The emotional buyers are seeing fault with the homes and are afraid to buy. The studious investor is beating the regular buyers to the punch because they know these homes will be selling for more in the future, and they can actually rent them out and make more return on their money than other investment vehicles. These homes make financial sense to investors on both ends of the spectrum.

The regular buyer is operating out of fear and lack of knowledge about the local market. After they miss out on several properties to higher bidders it becomes apparent to them this market is much more active than they actually thought.

The SW Florida real estate market is on sale, but it’s the old herd mentality buyers follow. Buyers tend to be most motivated when everyone else is buying, usually at the height of the market. It’s true in the stock market, and real estate market. Back in 2004 and 2005 people couldn’t buy fast enough, sometimes buying groups of homes. Would you say buying a home back in 2005 was a better investment than buying one in 2010? And yet the motivations were higher back in 2005 because people weren’t afraid, when they should have been. 2010 is a far greater opportunity, and the people who study the market realize it.

Later this week we hope to release our State of the Market Report at www.Topagent.com so you can analyze what properties are selling the best right now, analyze where the inventory is, and what prices are doing on a monthly basis. Being informed will help you make a better buying or selling decision. It makes no sense to miss out on opportunities because of lack of local market knowledge just as it makes little sense to overpay, or list at the wrong price either. If you list too high your property won’t sell, and if you list too low you’ll be giving equity away to someone else who is more informed than you.

Below is a graph of inventory levels in just Fort Myers and Cape Coral since 2004. The blue line is the active inventory listed in MLS and the orange line is the pending sales listed in MLS. As you can see, back in 2005 there were as many buyers in the marketplace as there were sellers trying to sell.

Listing Inventory in Fort Myers and Cape Coral MLS

These figures do not include all of Lee County Florida, but rather just the Fort Myers and Cape Coral areas of Lee County. At the end of the graph you’ll see a slight increase, but this is due to us switching MLS systems and including slightly more data. We’ll watch this trendline from here on out but we can say inventory has been decreasing for months and foreclosures have not been keeping pace with the record sales we’re experiencing here in SW Florida.

Bank foreclosure agents we’ve spoken with all are noticing a decrease in bank foreclosure inventory. The Ellis Team has sold much of it’s bank owned foreclosure inventory and have just about 6 left. We expect more in the future, but as of right now first time home buyers, second home buyers, and investors have scooped up all but 6 we just received. The 6 bank foreclosures have bank financing available at 4% interest with a 7 year balloon and 5% down for a primary buyer, and 6% interest and 20% down for an investor, or buyers can obtain their own financing.

May 2009 Ellis Team SW Florida Real Estate Current Market Index

The Ellis Team May 2009 SW Florida Real Estate Current Market Index shows relative stability. We switched the way we compile the data for this report, and it looks like the index held steady at 3.99, up slightly from 3.72 the month prior. All signs point to big sales ini April once they are released. We are tracking over 1,400 single family home sales in April, which far exceeds sales from last year.

In the coming days we will be releasing a Fort Myers-Cape Coral inventory chart which will show available inventory in just those areas, as well as pending sales activity. Lee County overall single family inventory stands at 12,579 which is up slightly from last months number of 12,356. Again, we switched data compilation sources and we now feel we’ll pick up a few extra listings by making the change, so it’s possible inventory didn’t really increase at all.

First time home buyers hoping to take advantage of the $8,000 tax credit are competing with investors trying to scoop up bank foreclosure bargains. Pending sales currently are running high, and might even be higher if we weren’t running out of foreclosure inventory. The lack of foreclosure inventory may lead to reduced sales going forward if foreclosures do not pick back up again soon. Some think the banks will be taking possession of more foreclosures soon as they work through the process, but less are being filed each month.

That is the question WINK News asked. WINK interviewed Brett Ellis and wanted to know how bank foreclosures were affecting the local SW FLorida real estate market. See WINK News report Local Housing Rebound? Bank foreclosures are drying up, and first time home buyers are competing with investors for these good deals. Inventory levels have continued to fall as home sales break all-time records. Because builders are not building right now, it will be interesting to see what happens if we don’t have a continued pipeline of affordable bank foreclosures to sustain buyers insatiable appetite for housing in SW Florida.

Brett also did a newspaper article with the Fort Myers News Press about how Lee County’s Meltdown Turns Golden for home buyers. Agents are amazed at how far prices have dropped, and perhaps they have over corrected. Listing inventory has fallen sharply in hard hit areas like Cape Coral, and Lehigh Acres is seeing a resurgence in home buying activity as buyers jump from Cape Coral in search of affordable houing in SW Florida.

Here are a few ways to search for bank foreclosures on our website:

Cape Coral Foreclosures Under$100k

Cape Coral Waterfront Foreclosures

Fort Myers Bank Foreclosures Under $200k

Fort Myers Bank Foreclosures $200k & Up

Reflection Lakes Foreclosures

Lehigh Acres Bank Foreclosures Under $100k

Lehigh Acres Bank Foreclosures $100k & Up

Lehigh Acres Foreclosures Under $100K
Lehigh Acres Foreclosures $100k and up