When Considering Florida Foreclosures And What They Are All About

Florida foreclosures and short sales are a new phenomenon in the Sunshine State, which has really seen nothing like the rate of foreclosure that it has over the last year or so. Keep in mind that Florida is extremely populous and that property and home ownership speculation has gone on for years down there. Unfortunately, late 2008 saw a huge drop in the real estate market followed by increasing numbers of foreclosures.

Reasons for this sad state of affairs down in Florida are varied, of course. Like much of the country, many people were investing in short-term turnarounds where a property would be bought (and either improved or sat on for several months) and then sold for a tidy profit. In many cases, these investors were taking the property and obtaining loans on it to invest in another property, which is known as leveraging.

The whole process is known colloquially as “flipping, ” and the times were good for “flippers” for quite a while. Unfortunately, many had no business in the market and were completely unprepared when property values began to slide precipitously. They were caught out with not enough money in reserve to now sit on a property for maybe years and with no hope of earning enough income to meet obligations in the short and long terms.

Of course, it was inevitable that these investors and even the average homeowner, who’d bought a property on a short-term adjustable rate or “interest only” mortgage with the expectation that they’d be out of the home with a profit before their payments adjusted upwards, would be caught in a vise of their own design. Their monthly payments skyrocketed in some cases, and banks began to act as banks do with poorly-performing mortgages; they foreclosed.

As a consequence, a great many homeowners and real estate investment speculators are looking at ways to get out of these properties, including conducting a short sale. If it works, it’s a viable alternative to just allowing a home to go into foreclosure, as long as the lender allows such a sale. Homeowners avoid a huge hit to their credit scores and lenders will at least get some money rather than none from the sale.

A short sale, basically, can allow a homeowner or even an investor (as long as the lenders allow it) to sell a home or property on the market for whatever the market is willing to pay. The lender usually ends up forgiving the difference (though there are tax consequences to a short sale), which it might be willing to do considering the median home value in many Florida markets is down by about 40%.

The rate of Florida foreclosures appear to have stabilized at the moment, though many economists believe it will still continue to climb as the broader economy continues to experience an economic slump. With many homes in the state’s home inventory in danger of foreclosure, a savvy and well-funded investor may actually be able to do something in the market, if he or she has the guts.

What to know about FL foreclosures and short sales can come in very handy in these difficult and economically-challenging times. We have got the best inside info on fl foreclosure properties.