Rockaster

Buying a property through an auction i.e. buying a foreclosed property is the most profitable and common way to make fortune in the field of real estate. But if you do not know how to buy a foreclosed property, it can also turn to be the easiest way to loose a fortune. Most disasters occur due to over bidding on the property without assessing the real market value properly and fix up costs of the property in the bidding. Fortune on a foreclosed property can make or break that depends on the research you did.

Auctions of foreclosed property are held at public auctions, these auctions are conducted under the supervision of the country or state court where the property is situated. This works in favor of the buyer as the transfer of title is immediately executed upon winning the bid. In most of the cases the winning bidder is the lender who has requested the foreclosure of the property in the first place.

Let us look into the pros and cons of buying a foreclosed property.

If we go for the advantages, the main advantage of buying a foreclosed property through an auction is the profitability, i.e. the difference between the highly discounted price and the estimated value you can sell it at. A normal foreclosure property auction has six-week notice enabling the interested buyer to inspect the property and assess its total cost including the fix ups and other issues and research the market price at which it can be disposed of. One must always remember that bidding at a foreclosed property auction need not be competitive but based on what you assess.

For the disadvantages, the main disadvantage in buying a foreclosed property from a court auction is that it requires a lot of capital investment. The payment period is very short and one should be ready even before bidding to successfully buy a foreclosed property. A major disadvantage would be transfer of title as it involves a great risk. If your research is not correct or incomplete it could lead to major losses. If the risk is high the profit will also be better provided you be careful and do a significant research before buying one.

Buying a foreclosed property involves a lot of learning. Smart businesspersons have been known to experience the darker side of buying and selling the foreclosed properties. If one is careful he can make the most out of it, but if one is careless they can also turn into bankrupts in matter of weeks.

Despite the hurricanes in 2004, Florida real estate was on fire. Pre-construction developments, commercial buildings, and home constructions dotted the coast. The lenders have a field day handing out mortgages to interested investors rushing to buy properties. Even the hurricane threat and the stigma of being a hurricane country did not stop investors of Florida real estate from backing out. What’s surprising is that after every hurricane, new rebuilding projects seem to rise up from wave-washed lands.

Then Katrina came in 2005 and wiped almost everything out. Almost everybody expected the collapse of the Florida real estate bubble. But no, the Florida real estate developers faced the challenge of rebuilding the cities and coastal areas. The result? Before the year ended, Florida real estate was back and stronger than ever. It was as if Katrina never came, and healthy business backlog sustained the finance and real estate blocks making them even more active than before. The only problem developers expect to have other than the rising cost of construction is the source of their skilled laborers. Now, this is not what you would call a dead industry, is it?

It’s a positive thing for Florida real estate that developers took the hurricane threat and turned it into a profitable venture. 2006 saw that other than coastal and beach front developments; developers started to develop properties within the cities. An example is the ongoing downtown Miami pre-construction trend that is touted to be a new Manhattan. Developers are also busy with many top priority projects certain to keep the state on the top of real estate choices as well to attract new businesses. Town centers were built in Palm Coasts and Orange City, while extensive “Gateway” complexes were started in Daytona Beach and Port Orange.

Other developments in Florida real estate include the building and development of properties in higher areas like the cliffs. Aside from the sea and beach view, these new properties also offer another feature which coastal units cannot match: elevation. Studies show that the high prices of real estate on the coast and hurricane scare shifted the demand and need towards inland areas that has higher locations, which are scarce on Florida coast.The developers saw a market for more elevated properties in the light of the recent hurricanes. People are getting interested in procuring higher level real estate as a precaution against typhoons and floods caused by hurricanes. The development of an experimental property called Owls’ Head is touted as a test for the higher elevation market. From this vantage point, I think Florida real estate braved the waves and came out on top.

A walk-through is an important step in a real estate transaction. To get the most out of it, make sure you understand the terms of the purchase contract.

Check Things the Contract Specifies

When you signed the contact to purchase your new home, certain elements and characteristics were specified. If the home does not match those elements on the walk-through, the contract will give you leveraging position. Consider the following:

If theres a hole in the wallboard caused by the leg of a table going through it when the seller was moving out, the house is not in substantially the same condition as when you wrote the contract and the wallboard was intact.

If you fill up that lovely, large Jacuzzi tub and the jets wont work, there is a problem with the working systems of the home. If you start the dishwasher, and it leaks before the cycle is finished, that appliance is not in normal working order. If all the surface burners on the stove wont light (if gas) or heat to red hot (if electric), ditto. If the heat or air conditioning wont come on, we have another problem with the working systems.

Allow yourself enough time to really pay attention and check on things. Usually an hour to an hour and a half is enough. Dont have a chip on your shoulder. Do be a good business person and systematically check.

If your contract calls for something you cant easily judge and it requires a third party to do it (such as the HVAC service mentioned above), you can request a copy of a paid bill at settlement. This is usually sufficient indication that the work has been done, and you know whom to call if there is a problem.

What If You Find a Problem?

Settlement may, or may not, be delayed if a problem is discovered. If its small and something you can easily fix, you may just want to ignore it. If it is something expensive and extensive, you probably dont want to ignore it. Many approaches are possible, but my inclination would be to go to the settlement table anyway and request that enough money be set aside in an escrow account held by a third party (not the buyer or the seller) to fix the problem. Id pad the amount a little to be sure theres enough. Those funds could then be used to complete the needed work and then the balance released to the seller.

If the seller is not willing to accept the idea of funds in escrow, Id request a delay of settlement until the work has been completed. The terms of such a delay need to be spelled out in an addendum to your contract.

Setting out to use walk-through to change the terms of a contract is not fair. However, if a walk-through shows that the terms of your contract have not been met, you need to figure out how to get things back on track and are behaving appropriately when you do so.

Most walk-throughs go smoothly. Lets hope yours is one of the smooth ones.

Descriptive Terms in Real Estate Ads – Yet More Definitions

If you are buying or selling a home, the chances are good you struggle with the meaning of descriptive real estate terms. Here are explanations and definitions for more terms.

“Plantation Shutters”

Refers to interior shutters with large, moveable louvers that can be used much like Venetian blinds. Often they’re used only on the bottom half of the window.

“Palladian Window”

A tall window that is rectangular except for an arched top and has wooden muntins separating the panes of glass. It is based on a revived classic style of architecture and the work of Andrea Palladio. Builders often use them as the window over the front door in homes with two story entrance foyers.

“Pocket Doors”

Doors that open by sliding into a slot in the wall much as a serving tray fits into a vertical slot built into a kitchen cabinet. It leaves wall space unaffected by opening and closing doors. I’ve seen them on bathrooms in modern houses. I’ve also seen them used in pairs that meet in the middle when closed as they were in older houses. Between a living room and dining room might be a good place. My grandmother had one between the front and back parlors in her home in Richmond, Virginia. Now that was a neat old house. It could always expand to accommodate one more family member or friend.

“Fireplace,” “Wood Stove,” “Wood Stove Insert”

A fireplace can burn wood, coal, or gas (natural or propane). If gas, it may or may not be vented to the outdoors. It is generally thought to be dangerous to have a non-vented gas fireplace in a bedroom and is against “code” in many areas. A wood stove burns wood, is free standing (on a non-flammable surface), and is vented to the outside. A wood stove insert is generally fitted into an existing fireplace designed to burn wood or coal. Preferences have to do with perceived beauty, convenience, heat production, and safety.

Well, those are some of the terms frequently seen in real estate listings and advertisements and their usual meanings at this writing. I hope you find it useful.