As I understand it FHA will no longer impose the 3 month waiting period for investors to "flip" / resell homes that they have renovated, making it easier to get more loans through quickly.
As long as the flippers out there realize, they need to be realistic in their asking prices so that they are not in for a surprise when it comes time to for the buyer to get a loan and an appraisal.
One trend I have noticed in Atlanta is that while prices are at rock bottom (you can buy a homes in some areas as low as $5,000- $10,000) I kid you not! Less than a car. There is an increase in renovations going on and they are reselling these same homes for $100,000+. These homes were selling in the $200,000+ range in the hey days of 2005-2006, but these new investors are going to be making a killing in these areas.
As an appraiser this poses a real challenge. On one hand you have non renovated homes selling for dirt cheap and renovated homes selling way over what they paid to renovate the homes plus their acquisition costs. So what do we do. Either make huge adjustments to reflect what the market is willing to pay in this area for renovated homes vs. non renovated ones or go into other neighborhoods where renovations are abundant and then make adjustments for locational factors. The latter would surely look much better on paper as large adjustments would not be necessary for quality and condition and therefore aggregates are not off the map, but lenders and underwriters want sales as close to the subject as possible and in the same neighborhood. So what it boils down to is a very good explanation in the report as to why each and every sale was chosen and why you had to go to other areas to find comparably renovated homes. You just better have a good handle on site values for the comparables you are using or it could skew the value of the subject property considerably one way or the other.
But I digress......Bottom line is FHA's new ruling on waiving the waiting time for the next year is certainly good news for investors and for buyers who happen to see the home of their dreams all nicely renovated and ready to go and no wait time to buy them now.
Stay tuned many more changes are likely as we wade thru all the new regulations as they relate to loans, home buying and appraisals.
Mary Thompson
Certified/FHA Approved Appraiser
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