“Cash is not King” When Buying Short Sales and Banks Foreclosures
Orlando Vacation Homes – Charles Valeston, La Rosa Realty: You have probably heard the saying “Cash is King”. Well in the current Orlando vacation home market this is not necessarily the case. Banks have been very slow to respond to Short Sales and are not swayed by cash offers. This is because banks follow a set procedure, part of which involves obtaining a Broker Price Opinion from a third Real Estate Broker not representing either the buying or selling party. Similarly, “Cash is not King” when Banks sell a foreclosed home. Banks will most often set the asking price low to encourage several buyers to make bids and the Home will be sold to the highest bidder. However, in both instances Banks require proof of cash or financing with all offers.
“Cash is King” can be of significant influence with sellers in a normal sales transaction
“Cash is King” can be of significant influence with sellers in a normal sales transaction. Because it is less hassle for the seller and generally means a quicker close, sellers may be swayed to take a lower offer by cash buyers. As pointed out in a previous article we are experiencing a rise in normal sales and a substantial reduction in Short Sales and Bank Foreclosures in the Orlando vacation home market.
Leverage Your Money Through Financing
But if you want to leverage your money and will seek financing from local Orlando banks than here are some things to be prepared for:
If you are a citizen of another country, by definition you are a Foreign National Investor.
- In this event you will need to make an initial investment of 30% of the purchase price and pay closing cost which will be an additional 4% to 5% of the purchase price.
- The funds for the initial investment and closing cost must be seasoned for 60 days. This means you must show evidence the monies where in your account for the past 60 days. So if you plan to open a US bank account and transfer funds into it due this well in advance of your house hunting trip.
- In addition, most Banks who lend to Foreign Nationals will require proof of employment and two letters of credit. The originating loan officer of the Bank will provide specific guidelines as to acceptable sources for letters of credit.
- In today’s lending market a typical foreign national loan term is 30 years with a 30 year repayment period. Banks provides a variable rate loan program to Foreign Nationals. The loan program works this way. The rate will remain fixed for the first five years of the term, example 4.5% and then will change annually based on a 1-Year LIBOR index, for the remainder of the 25 year term.
- Interest rates can change daily, without notice, until locked in. and the 4.5% is used as an example, only.
Buyers who are US citizens will be subject to the full documentation standards followed by most Banks.
- The initial investment will be 20% of the purchase price and an additional 4% to 5% of the purchase price for closing cost.
- Full documentation standards includes credit report(s), employment verification(s), 30 day proof of income, 60 day proof of seasoned funds to close, 2 years personal tax returns and any number of letters of explanations deemed necessary by the Bankís underwriter.
- Rates, terms and repayment periods will vary depending on weather the Vacation Home is truly a second home or an investment home.
Please visit www.vacationhomes-orlandofl for additional tips about vacation home ownership. Also, please share this site with your friends and family. In the meantime good luck and good house hunting.