Investors are returning to the Jacksonville Florida real estate market and according to experts, it is safe to buy a previously foreclosed upon house if title insurance – complete with a land survey – is available on it.
Flipping – where an investor buys a house, makes some improvements, and then quickly resells it for a big gain, has once more become big business.
Instead of relying on astronomical price increases, Jacksonville real estate investors now buying homes at foreclosure auctions from banks are instead relying on the age old adage of buy low, sell high. Investors are reselling the properties within months or even weeks for large gains – often reaping bigger profits than speculators during the real estate boom from 2001 – 2007.
But investors have to certainly be more cautious and a good Title Agent together with a good Land Surveyor in Jacksonville will protect them.
In the fall of 2010, some lenders suspended foreclosures while they reviewed their procedures. This was due to the “robo-signing” scandal in which some banks and law firms had not followed proper procedures on foreclosure paperwork. There are now many court cases pending wherein buyers are being forced to hand their purchases back to the original owners of these properties due to improper procedures during the foreclosure process – leaving buyers to fight for a return of their investment.
As long as the new lender and new owner have title insurance though, the former owner can’t seize the home back and the new owner will keep the house.
Many Jacksonville REO houses – that is, real estate owned by the bank – are decrepit. They sit empty for months before they are sold, and they end up in such bad shape that they are ineligible for mortgages. Investors often buy these REOs with cash, fix them up and sell them, just like the house flippers of the boom years.
Buying an REO straight from the bank rather than from a flipper may surely reap greater profits – as long as investors perform their proper due diligence.
A Clean Title
Whether purchased with a loan or with cash, issues regarding the property’s past could “cloud title” and cast doubt on the buyer’s ownership rights. Title insurance together with a land survey protects against defects in the title, such as undiscovered liens, forged signatures, defects in documentation, or physical encumbrances. “Physical encumbrances” can only be accounted for with a land survey performed by a Jacksonville Florida land surveyor and is the only way for a title policy to actually cover any losses associated with issues such as boundary disputes or encroachments.
An owner’s title policy – complete with a land survey – is optional but is highly recommended for properties that have been through foreclosure. Frankly, it is foolish to purchase any land in Jacksonville without a land survey. A title policy without a land survey will include a “survey exception” – a statement that says that issues concerning a “matter of survey” are only covered if a land surveyor has provided a land survey in connection with the title. Many investors are foregoing obtaining a land survey to cut on investment costs. A land surveyor’s fee is a tiny fraction of the fees associated with such an investment and is essential in investors due diligence requirements. A great many very costly survey related issues can be avoided completely by obtaining a low cost land survey from a land surveyor in Jacksonville.
Federally backed home loans used for purchases of Jacksonville properties are required to include a land survey. But many investors are buying with cash and title companies are not obtaining land surveys. Cash investors are well advised to insist that their title agents obtain a land survey or to contact a Jacksonville land surveyor directly.
Some title insurers have even refused to issue policies on some homes foreclosed by lenders involved in the robo-signing scandal (they are obviously not contacting land surveyors either). Fidelity National Financial is the largest mortgage insurance company and has issued a statement that “this situation will not have a material adverse impact on its title business.” Fidelity’s message is that “they’re still going to underwrite on REO properties.” This does not necessarily mean that they will require the use of a land surveyor… investors must take care to protect themselves fully.
We at Landtech Surveying strongly believe that investors and homebuyers must be protected and must be properly informed in their decisions. We work with many Jacksonville title agents and throughout Florida and may be contacted directly by visiting www.landtechsurvey.com
We are happy to answer these questions as well as inform you of our low fees, coverage area, and turnaround time.
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