The season has finally kick in and people are starting to move, literally.
I want to say a few things about the foreclosures in this market and some things to look out for in dealing with REO (real estate owned) properties.
First, the foreclosure market continues to grow in the DFW Metro Area, no community is left untouched by this. Now, it is not all doom and gloom, this market presents such a great opportunities for buyers to make some unbelievable deals.
The suburbs have there share of foreclosures as quoted in Dallas Morning News. I will talk about Frisco here since it is directly north of Plano and we have properties listed for sale on this site. Frisco is up 57% in residential foreclosures postings in the first half of 2007! Most of the foreclosures are in the suburbs. It is new development and many overreached their bounds, meaning if you have a hiccup (job loss -unforeseen circumstances) you are unable to afford your home.
Frisco is where the bulk of new building is and many investor houses are available for sale or lease option. This means you can lease with a portion of your rent payment going to the sales price if you decide to buy it. You will usually pay a premium to do this type of purchase, it could cost you 20% extra. Watch out for these.
The strangest things are happening with lenders these days and it is just not with foreclosures; it is all types of loans and qualifiers. For example, we have had two deals that the lender decided to change the contract after it had closed and funded! You can’t do that! These are the two scenarios:
- 16 units investment condos closed, but lender decided to ask the buyer to get exterior insurance after the closing, now folks, all this is suppose to be done prior to closing. In Texas, it is not required to have this insurance when it is the HOA that covers that insurance. The lender from California did not care about that and would not release funds until this was acquired. Held the funding up for 5 days.
- Fantastic foreclosure buy – I couldn’t even believe what we got it for! But after it closed and funded the lender decided he didn’t want to pay the commissions stated in the contract or MLS. They decided to let the broker/agent split it or hold it up and go to mediation. Because the property had funded and we had the key our buyer was able to move in and did not know about this bad move by the lender. Unbelievable!
So how do we deal with things like this? I don’t think I need to tell you that tempers run high! You need to be able to hold the deal together. This is an art or talent if you will. Everyone needs to to take a deep breath and communication is the key component here. There is always a creative solution and I mean an ethical solution, but it takes experience and knowledge of the industry and contracts to do it. We solve them every time to the satisfaction of our client. There are so many involved in a real estate transaction that you need to be able to deal with all parties amicably and talk to the right person.
Anyone else having weird deals that you think were not quite right?