Gulf County Florida
Foreclosed Properties

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Foreclosures in Cape San Blas
and Port St Joe Florida

Approximately 15% of homes listed for sale in Gulf County area are either foreclosures or short sales (short sales, are when the value of the property is less than the mortgage amount owed to the lender). Foreclosed properties exist throughout the area.

Foreclosures in desirable second home communities appear sporadically, and if priced at foreclosed values, can turn out to be a really good buy. They do not last long

Foreclosures are Sold "AS IS"

If you are thinking about a second home purchase, and want to focus on foreclosures in a desirable Gulf County second home community, then your choices will be few, and you better bring along your hammer, paintbrush and work crews. Appliances have usually been stripped out by the foreclosed owner, along with any fixtures of value.

Foreclosure are usually in disrepair, they are owned by the “bank.” Mr. “Bank” has never stepped in the property or looked at it. The properties are sold in "AS IS" condition, meaning repairs that would typically be the responsibility of the seller will not be made. The buyer is accepting the property, in its "as is" condition.

The buyer still has the right to inspect the property, and can cancel the agreement within a certain timeframe if the extent of discovered repairs are over and above what was anticipated.

Purchasing a foreclosure could be a very good value. In some cases a foreclosed property can be in very good condition, particularly recently built properties, purchased by investors at peak pricing.

Short Sales

A short sale is when the home's value is less than the mortgage amount due a lender and the lender has agreed to accept less for payment. The lender is not involved with picking the listing agent, setting the list price, paying expenses or anything else. But the lender must approve the sell, that is the extent of their involvement. Industry experts estimate that only 15% of short sales actually sell, the rest end up in foreclosure.

With short sales, the seller does not care what the property is listed at, because at closing they get nothing back. Let's say for example, a property's value is $400,000, the seller and agent could list it for $400,000, $300,000, $200,000, or $100,000. It makes no difference to them, as the seller gets nothing back at closing, no matter what offer they accept.

The seller will not know what the bank will accept for an offer, until an offer is actually submitted. In other words, an offer, any offer is needed to get the ball rolling. For this reason, it is common practice for listing agents to deliberately list the property substantially below its true value. This lures unsuspecting buyers into the cobweb. With a lowball offer in hand, the seller can then submit something to the bank for approval. This approval process can take 6 to 8 weeks or more.

The bank then rejects the lowball offer, and then provides the seller with a "bank approved" priced. The prospective buyer, who thought they were going to get the deal of the life time, then goes away, regretting the amount of time they wasted on the process. But the seller and listing agent are happy, because they now know what the bank will accept for an offer, and can list the property at the "bank approved" price. 

For example let's say a property is listed at $200,000, and an offer comes in for the $200,000, it is then sent to the lender for their approval. The lender will order two appraisals of the property. If the property appraises at $400,000 for example, then the lender will accept an offer in the $400,000 price neighborhood.

So in this example a buyer puts an offer in at $200,000, the full list price, hoping to purchase. And then finds out four to six weeks later the lender wants $400,000. In the meantime, several other properties the buyer had interest in the $200,000 price range, have been sold and are no longer available.

The exception is when this short sale process has already occurred, so the property can be listed at the bank's pre-approved price.

With a short sale, neither the seller or the listing agent cares what the property sells for, just that it sells. If it sells in a short sale then the seller avoids foreclosure, and does not get their credit score dinged. If it forecloses, then the bank picks its own listing agent to get it sold and sets the list price.

Foreclosure vs. Short Sale

	Foreclosure	Short Sale
Who Owns the Property	Bank	Seller
Who Selects the Agent	Bank	Seller
Who Selects the List Price	Bank	Agent/Seller
Who maintains the property	Bank	Seller or Nobody
Who is paying utilities	Bank	Seller or Nobody
Who Pays Back Fees and Taxes	Bank	Buyer
Response Time	Quick	Delayed or Never
Likelihood of Selling	High	Low

 

If a buyer is not willing to wait at least six weeks to hear back on an offer, then there is no sense in submitting an offer on a short sell. Once again the bank does not own the property, but must approve the offer that gives them less than what is owed.

This concept is difficult to understand for most buyers. Because it does not fit the procedure that most buyers are accustomed to. That is, an offer is submitted to the seller who had set the list price, as an indication of what they would accept for a sale. And good faith negotiations occur based on that list price.

With a short sale, the list price is meaningless, as the list price on a short sale has not been set by the party that must approve the offer - the lender. So an offer needs to be submitted based on an reasonable assessment of the property's true value, regardless of the listed price.