With the recent change in HUD policy allowing investors to purchase homes and flip them right away and not forcing them to hold title before they can be sold with FHA financing will definitely help the flipper but drive the first time home buyer away from the distressed homes for sale in the Hemet -San Jacinto CA valley.
The investors have the cash and the first time buyers have the credit. all of the good deals are bought quickly with cash buyers and the FHA buyers are cut out of the market - especially if there is a low appraisal on the property. So, what we are going to start seeing even more of is real estate investors taking advantage of the market and buying, rehabbing and selling turn-key home to first time home buyers.
BUYER BEWARE
When a flipper takes possession of real estate, unlike the banks, the new seller has to complete a full set of disclosures, according to California Real Estate law. Now, eager to unload, look for sellers getting
caught up in what they may consider a "little white lie".
It has never been uncommon for a seller to down-play the property taxes (maybe not include the 'special assessments') or utility bills, forget about pests (like the ants that invade the home interior every summer) or downplay a flooding problem or noise at certain times of day.
It is not uncommon for a real estate deal to fall apart because the buyer discovers that the new home is not all it is represented to be.
Some of the common 'Little White Lies" that I have heard include the following:
"The house is 2,500 sq ft." Well if you count the garage it may be, but when the appraiser goes through and measures the home, room by room, it is possible the 400 sq ft in the garage needs to be eliminated from those numbers - making for a significant difference in value.
or how about...
We don't have pests. Unless you have a termite inspection you may never know if the home is infested or not. It is always recommend that you, as a home buyer have the home inspected by a pest control company as well as a building inspector . . . even if you think you know all about homes yourself. Get a fresh set of eyes on the home.
or...
"This is a quiet neighborhood". It may be when you find the home on a Tuesday afternoon and then on the Thursday morning you inspect or the Monday afternoon when you do your final walk-through. But what about that neighbor who lives on the block behind you and only 1 house down and they party late into the night every Friday night with loud music and lots of kids with cars cruising the neighborhood? Do you think that could be annoying?
my favorite. . .
"There's going to be a ..." Fill in the blank. Truth is if it isn't built don't count on it. Many builder had great expectations when developing communities during the boom period but had the rug pulled out from them totally unprepared. I know of one Hemet master planned community that collects $175 a month in HOA for a pool and clubhouse that has never been occupied - it's tied up in the builders bankruptcy and the HOA cannot take possession - yet they collect money every month as if it is right there.
It is very important that when buying a home from anyone really, but flippers have started to emerge and not all of them will be as credible as we would like. I am not saying there is anything wrong with recently rehabbed homes as they will be having a significant share in the marketplace very soon...just be careful and don't let the eye candy fool you and lure you into a false sense of security.
D O Y O U R D U E D I L L I G E N C E
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