Cash Is King!

One thing has remained a constant through out the history of Real Estate. Cash is King! Whether you are buying a traditional re-sale or foreclosure or short sale, cash offers will always be more appealing to the sellers.

Even if you do not have enough cash to pay for a property in full, having 20 or 30% down payment will go a long way when buying real estate, especially foreclosed properties and distressed properties.

You may ask why cash is so important. Well, cash is important right now because most lenders are only offering FHA loans with 3.5% down payment. And FHA requires inspection of properties so that they meet certain standards before a loan is issued.

Many of the properties being sold have had damage, vandalism, missing appliances and fixtures, neglect and so on. These properties do not meet FHA standards which means the seller will need to incur additional costs to repair. A cash buyer can waltz in and make an offer and close in less than 30 days, and the seller reduces holding costs and avoids any repair costs.

That's why a cash buyer can usually purchase for less than a typical buyer using FHA. And if you have 20% down, you probably qualify for a traditional mortgage and can also purchase the home "as is". The other reason an FHA loan is not attractive to a seller is that it may take as long as 45 days to complete a transaction.

So, is it impossible to get a great buy using FHA? Not at all! All it takes is a little research and common sense. When searching for a property, look for homes that have been on the market for more than 90 days. The lenders who are selling foreclosed properties lose money every day the house is on the market and after 90 days, they are probably very motivated to get it off their books.

Also, look for homes that are in good condition, ie: newer roofs, a/c units, good windows, fully applianced and good flooring throughout. These are items that FHA inspectors are looking for.

Once you find that great deal, have your buyer's agent do a CMA of the property to help determine how much to offer. Remember, the seller has already done at least one or two CMA's and has a pretty good idea of the market value. If it's priced right, don't make a ridiculous offer, usually around 5% of asking is reasonable. Of course, if the property is truly over priced, offer close to market value and submit comps that support your offer.

Just keep in mind, the banks who own and sell foreclosed properties are only concerned with their financial bottom line, this is not an emotional transaction as it is with a traditional home owner. If the numbers work, you will get the house!

To start your search, go to: http://sthomson.servingbrevard.com

Foreclosures, Foreclosures, Foreclosures

The new mantra in Real Estate! Forget location, location, location. Buyers are gobbling up foreclosures no matter what the condition, location or size of the property. Low, low prices are the attraction and cash is king in these deals!

This is good news. The sooner we absorb these foreclosures and distressed properties, the sooner we will see a rebound to a "normal market".

Should you invest in a foreclosure (also known as an REO or bank owned property)? As long as you do your due diligence, you will be rewarded with a property that will probably increase in value over the next few years.

My next post will talk about how to buy a foreclosed property.

New and Improved

New title and new content for my real estate blog discussing Real Estate Trends in Brevard County, Florida.

To view previous posts go to: http://southernfriedrealestate.blogspot.com.