Investing in Vero Beach Foreclosure Properties

Vero Beach Florida - After month long run at record low levels, rates on 30 year fixed rate mortgages rose above 5 percent last week. Rates started their decline after the Federal Reserve announced last November their plan to buy $500 million in mortgage backed securities. It was hoped this would encourage banks to lend more money and help the troubled housing industry.

The majority of new mortgage activity came from home owners anxious to take advantage of rates just under 5% for a 30 year fixed rate. Prices seem to stabilizing especially in desirable areas as the available supply diminishes.

The pending expiration of the first time home buyers tax credit of $7,500 has been a factor in the entry level market. Well located homes in good condition, especially newer construction, are beginning to sell. Prospective home buyers with steady employment, a down payment and decent credit are getting loans.

Investors are also buying again, helping to deplete the overstock of Foreclosures and Short Sales. When income from a potential rental home equals holding costs, Investors are ready to act on the opportunity for future appreciation.

The recent decrease in home prices in Vero Beach, Sebastian and through out Indian River County is partially due to short sales during pre-foreclosure. Bargains seen in Bank owned properties that have gone through the foreclosure process are also spurring buyers and Investors to act.

Distressed properties are typically sold at 2 different stages of the foreclosure process.

Pre-foreclosure - when the seller is behind on payments and owes more than the home's value, the lender may accept less than the loan payoff, a "short sale". Public notice of this situation is made by filing a Lis Pendens

Post-foreclosure - is after the bank takes title and markets the property, also called an "REO" (lender owned) property. I have extensive experience with both stages and will explain the pros and cons of each approach.

Short Sales - since the home is usually occupied, it is being maintained and likely to be in better shape. The short sale process is still evolving - many lenders are overwhelmed and unable to respond to offers in a timely manner. This approach requires a great deal of patience from the buyer since the time from offer to closing can be 3 months or more.

Lender Owned - the property is usually listed with a Real Estate Broker and the process of buying is far more efficient. Although you are still dealing with a lender (not unlike a bureaucracy), this system has been in place longer. The downside is that the home has often sat vacant and is in need of repair. I always recommend a professional inspection regardless of outward appearance.
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