While there is no way of actually knowing the foreclosure rates and statistics across the World, there are good records in the USA. After a hike up 81% in 2008, to hitting an overall all time record in 2010 with over 2.9 million properties! But recently the states are seeing a ten year low in 2016. What does that mean to us? We believe that this drives foreign investment, some perhaps to Costa Rica. Since savvy real estate market investors have more competition on the home-front with less foreclosures on the market, they diversify their strategy by investing in beach properties and mountain homes with views, or condo developments. Just last year, Costa Rica hosted a Foreclosure Expo at the Citi Mall in Alajuela where some 760 foreclosed homes, lots, and commercial properties were up for grabs in April 15-17, at the inaugural “Interbank Expo,” where the State-owned banks, Banco de Costa Rica, Banco Nacional and Banco Popular joined forces to remove foreclosed real estate from their books. The good news is that we have found a way to offer Costa Rica foreclosures to the open market! Usually needing some TLC, these properties are diverse and always a great deal, usually presented at 1/3 to 1/4 of the bank appraised value, sometimes at land value. We are constantly working with the banks to offer you the best deals in the foreclosure sector. If you have a property that you have fallen behind in payments, maybe we can help. We have a Rolodex full of investors who might be interested in getting you out of a mess. Reach out, before it is too late and you ruin your credit by going into default.
Many buyers associate buying a foreclosure with getting a steal of a deal. This can be true, but there are also potential pitfalls. The pros and cons of buying a home involved in foreclosure vary with the phase of foreclosure the property is in when purchased. First of all, there are 2 kinds of foreclosures:
- Foreclosures – the bank has already evicted the owner, filed for foreclosure and placed the property on the auction block with no success. Now the property is a foreclosure and sold AS IS.
- Short Sales – these properties are usually over 3 months past due, the owner has fallen behind in payments and risks the inevitability of going into default, becoming a foreclosure.
Many investors find both types of properties appealing, as long as there is a deal to be made. If you are a beginner investor, here are some things to consider before leaping into the foreclosure market.
- Seller will be motivated to achieve a fast sale, maybe creating opportunity for below market purchase price and increasing buyer’s bargaining power.
- Seller might be amenable to providing major closing cost credits and other concessions.
- Buyer can use regular mortgage financing.
- Buyer can do all standard inspections, including researching title during due diligence/contingency period.
- Seller must legally provide complete history of property’s condition, problems, repairs, inspections on file, existing surveys & permits, etc.
- Property can be sold for either outstanding mortgage balance owed to foreclosing mortgage holder or less than appraised value to get it off the books – this can mean a lower price for the property.
- Cash payments reduce competition and increase bargaining power for buyer, negating any requirements a lender might have as to livability and/or condition.
- Even though the buyer obtains inspections and due diligence, property is usually sold AS IS.
- Auction purchase price must be paid in cash on the same day as the auction – no mortgage is usually allowed. Bank cannot provide disclosures as to property history/condition issues. If bank believes auction will not recover a good price, bank may buy the property at auction.
- Buyer may take property and owe other liens, back taxes and mortgages. Buyer must research state of title prior to auction.
- Property condition might be suspect due to damage done by upset homeowners.
- No commissions or attorney’s fees will be paid; buyer must pay for their own representation.