Buying Real Estate Foreclosures
Buying foreclosed properties presents an opportunity for investors as well as someone looking to purchase a home, condo, or lot on which to build, for their personal use. Banks, Savings Institutions, Mortgage companies, Insurance Companies all end up with REO (Real estate owned) inventory that they need to sell to clear off their books. Many lenders will offer special financing to qualified buyers to facilitate a quick transaction
It is important to thoroughly investigate potential purchases. Many foreclosed properties have been neglected and may need significant repairs or rehabilitation. Those costs need to be factored into the purchase price equation. Often vacant properties do not have water, electric or other utilities turned on so it may be difficult to determine whether there are plumbing leaks, electrical or air conditioning malfunctions or other deficiencies. When negotiating a contract on such properties include provisions for inspections with the utilities on before finalizing the transaction.
If the proposed foreclosure purchase is going to require repairs, make sure that you have enough money to adequately undertake the repairs and carry the negative cash flow during the repair process. Some lenders will include “rehabilitation funds” in the mortgage while others may not. Expect the unexpected. There are always surprises during any rehabilitation program, especially foreclosures.
Do your homework prior to entering into any contract. Check with the local zoning department to make sure that the property is still zoned and suitable for the use you intend. Not infrequently, local jurisdictions will rezone unoccupied property, particulary if there have been no utilities for some time. This is particularly likely if a neighborhood is undergoing considerable change or if a property had some special zoning exception “grandfathered”. I auctioned a property for a lender in Jacksonville, FL that had been vacant and without utilites for 2 years. The property had been operated as a small aprtment building with eight (1 bedroom, 1 bath) apartments. In doing our auction preparation we found that the city had rezoned the property from multifamily to single family. We had to auction the property as a single family home. The purchaser had to spend considerable monies remodeling the house, to remove 7 kitchens and end up with a workable single family home. When the original lender made a mortgage on the 8 unit apartment building their “old” appraisal was for significantly more than the single family home was worth. Just because a foreclosure sounds cheap, it doesn’t make it a good buy for you.
Les Bryant
http://www.articlesbase.com/non-fiction-articles/buying-real-estate-foreclosures-55720.html
Categories: condo insurance Tags: Buying Foreclosed Properties, Buying Foreclosures, Buying Real Estate Foreclosures, Deficiencies, Home Condo, Insurance Companies, Jacksonville Fl, Jurisdictions, Mortgage Companies, Negative Cash Flow, Owned Inventory, Plumbing Leaks, Real Estate Foreclosures, Rehabilitation Funds, Rehabilitation Program, Savings Institutions, Unoccupied Property, Utilites, Vacant Properties, Zoning Department
Who is the insured on a homeowners insurance policy if the insured dies?
About a month before she died, my Aunt transferred her house into my name using a quit claim deed. We did not talk about her homeowners insurance. After she died, I could not find any information on who her agent was or who the company was. When the premium bill came, I promptly paid it. About a month later, the company sent a letter asking if anyone was living in the house. The house is vacant. I gave them details on me and a copy of the death certificate and the deed and explained the situation. I never heard from them again. The question is, typically, does coverage cease when the insured passes away? Or does it automatically transfer when the house changes ownership? The house is free and clear by the way.
Oh, bummer.
Well, to answer the first question . . . the executor of the estate is an insured, while the estate is being settled, along with the estate of the deceased. Vacancy does become an issue, so likely the company will be cancellling or nonrenewing the policy, but it DOESNT MATTER. More on that . . .
HOWEVER, homeowners policies aren’t transferrable, so HER policy is irrelevant, if she quit claim deeded the house to YOU. YOU need your OWN policy. Her policy doesn’t cover YOUR house. So right now, the house is uninsured. The policy doesn’t transfer – not automatically, not with effort. You have to buy your own policy.
For a vacant property policy, it’s EXPENSIVE. And the coverage isn’t very broad. Contact a local agent who sells Foremost Insurance – www.foremost.com – they have the BEST price for vacant properties.