SCHUTT LAW FIRM, P.A.
Phone: 239.540.7007
Title Insurance
09/12/2018
If you're a first time homebuyer looking for that perfect home, you may be tempted to invest in a foreclosed home. While this option may be cheaper, there are a few things you should consider first.

Buying a Foreclosed Home

Buying a foreclosed home isn't a bad option, you just have to understand that it's different than buying a regular home off the market. While this may be a more affordable option, there are other things beyond the sticker price to consider before deciding a foreclosed home is the way to go. Before you decide to invest in a foreclosure, consider the following information.

Is It a Bargain?

One of the main reasons homebuyers decide to invest in a foreclosed home is because of the price tag. While the price may be significantly lower than that of non-foreclosed homes, keep in mind that there might be more things to pay for going forward. Basically, your bargain will come at a price. Think about it like this: if the home was foreclosed, this means the owner couldn't keep up with payments. If they were unable to make their payments, they probably weren't keeping up with maintenance or repairs either. With this in mind, don't just look at the price of the home, but also really consider the condition of the home. Depending on its condition, you may find that you'll end up paying just as much as you would if you were to invest in a non-foreclosed home.

Will Repairs Be Needed?

To answer this question simply, yes, repairs will be needed. With foreclosed homes, there's often no getting around this. Most foreclosed homes are very much in need of repairs, whether minor or major. The takeaway from this point is to not underestimate the price of these repairs. Some fixes can be easy and cost effective, especially cosmetic fixes like painting a bedroom or doing some cleaning. Other repairs, however, can cost quite a bit. Invisible repairs are often the most dire and the most expensive to take care of. If the house needs serious foundation work or a roof replacement, this can cost quite a bit. If the home has been vacant for some time, this can lead to another set of issues, including pest infestations, mold growth, and plumbing troubles. Once you know what repairs are needed, have a contractor give you estimates for the work needed so you can get a better idea of what you will be spending. Before closing on a foreclosed home, be absolutely sure you have title insurance in Fort Myers to protect your investment. If you're not sure why you would need title insurance, Schutt Law is happy to help you understand! Give their title experts a call at (239) 540-7007 to learn more.

Can You Negotiate?

When buying a foreclosed home, there really isn't any room for negotiations. While you can use the results of the home inspection to negotiate a lower price when buying a non-foreclosed home, this isn't applicable when buying a foreclosed home. These homes are basically sold as-is, so you don't get much of a say in anything. The home inspection and report are basically a heads up that informs you what you will need to take care of before the home is back to its best. Because of this, the home inspection is crucial as is getting estimates for the repairs needed.

Should You Buy at an Auction?

If you decide buying a foreclosed home is your best option, you will likely come across two options for buying. The first one is purchasing it at a home auction. You may get a home for an even lower price this way, but it comes with more work. To start, you most likely won't be allowed to tour the home or get a home inspection before deciding to bid on it. This leaves you in danger of making a purchase that will end up costing you more than a non-foreclosed home. You will also most likely have to pay cash for the home and if the previous homeowner is still living there, you will have to evict them. Your other option is to purchase an REO home, or a real estate owned home. This basically means the home was foreclosed on and the bank swooped in and owns the property. This is a better option because you will be able to get a home inspection, you won't have to evict anyone, and the bank will take care of legal issues like liens or clouds in the title.

Get Title Insurance in Fort Myers

Before finalizing your home purchase, be sure you're protected by title insurace. If you're not quite sure what the importance of this is, call Schutt Law at (239) 540-7007 to learn all about it!
WHY TITLE INSURANCE?
Owning real estate is one of the most precious values of freedom in this country. You want the assurance that the property you are buying will be yours. Other than your mortgage holder, no one else should have any claims or restrictions against your home.

Title insurance is issued after a careful examination of the public records. But even the most thorough search cannot absolutely assure that no title faults are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property.

Title insurance is different from other types of insurance in that it protects you, the insured, from a loss that may occur from matters or faults from the past. Other types of insurance such as auto, life, or health cover you against losses that may occur in the future. Title insurance does not protect against any future faults, but does protect you from risks or undiscovered interests. Another difference is that you pay a one-time premium for a policy that remains effective until the property is sold to a new owner - even if that doesn't occur for decades.
What is a Lender's Policy?

A lender's policy, also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale.

This policy only protects the lender's interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner's policy.
What is an owner's policy?

An owner's policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.

What does an owner's policy provide?

- Protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy.
- Payment of legal costs if the title insurer has to defend your title against a covered claim.
- Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.
Why the seller needs to provide title insurance?

Any purchaser will need evidence that his investment in your property is free of title defects. The title insurance policy that you provide the purchaser is a guarantee that you are selling a clear title to your real estate, unencumbered by any legal attachments that might limit or jeopardize ownership. It will reassure your purchaser that he or she is protected from any risks or losses and could help you close your deal.
Why the buyer needs title insurance?

Without title insurance, you may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title. As a result, you may be held fully accountable for any prior liens, judgments or claims brought against your new property. If this should occur, your title policy insures that you will be defended at no cost against all covered claims up to the amount of the policy.
How much does title insurance cost?

The insurance commission approves and controls the premiums for title insurance policies. The premiums are paid only once and the cost depends upon the purchase price of the property and the policy amount must be equal to the purchase price.
What does title insurance protect from?
  • Fraud
  • Adverse possession
  • Rights of divorced parties
  • Deeds by minors
  • Undisclosed Heirs
  • Errors in tax records
  • False affidavits of death or heirshipProbate matters
  • Deeds and wills by persons of unsound mind
  • Conveyances by undisclosed divorced spouses
  • Forfeitures of real property due to criminal acts
  • Deeds by persons falsely representing their marital status
  • Documents executed by a revoked or expired Power of Attorney
  • Defective acknowledgements due to improper or expired notarization
  • Mistakes and omissions resulting in improper abstracting
  • Forged deeds, mortgages, wills, releases and other documents
  • False impersonation of the true land owner