Buy a House Fast

Owners who intend to live in their homes may be the focus of many current Federal programs, but the investor who buys a home to rent or renovate before renting is an important part of the housing picture these days. Investors plan on making a profit– never a dirty word in America!  Until now, would-be buyers could not obtain FHA financing on a home owned for less than 90 days.  Investors, who can often renovate and resell the home within three months, offer a stock of homes which often appealed to first time buyers who were then unable to find financing.

A new policy announced by HUD Secretary Shaun Donavan lifts the restrictions for buyers who are likely to buy HUD-owner properties, bank-owned properties, or homes purchased directly from sellers with an eye to “flipping” them—rehabbing them and putting them back on the market.  The move, effective for one year starting February 1, 2010, was approved to aid the current foreclosure crisis.

The theory is that the move will get homes in the hands of owner-occupants more quickly, which will in turn, aid neighborhood stabilization. Not only are empty homes often an eyesore, but they pose safety hazards and are an invitation to vandals to drop by and strip them of wiring, plumbing, and appliances.  The new law allows “flippers” to fix the homes and take their money and run, after selling the home to someone unlikely to qualify for traditional financing.

Given that the current housing stock is increased daily with bank-owned homes and other distressed properties, this gets the properties in salable condition more quickly.  Many buyers who are attracted by the lower prices attached to distressed properties are often unable or unwilling to do the renovations need to make the house livable.  Once the home is fixed up a bit, buyers are more interested taking the plunge.

The new program has some restrictions intended to prevent abuse:

• No sales to little Timmy or to Uncle Bob—sales must be arm’s-length.
• Lenders must meet certain criteria if the home is being sold for more than 20% of the seller’s acquisition cost.
• Only works with forward mortgages.
• Doesn’t apply to Home Equity Conversion Mortgages (HECM).

In the past, “flipping” acquired a bad name, as investors would resell homes at inflated prices to unsuspecting buyers.  When the homes, often barely renovated, were then financed with high interest loans, buyers were left with worthless properties and high mortgages.

For more, information, read the full text of the new policy at the HUD website, then give Express Realty Services a call if you are interested in buying or selling. express Realty Services guarantees to sell your home in under 60 days, or we will buy it.

If you believe what you see on TV, buying a home and performing all repairs and renovations yourself is a walk in the park.  Many consider a fixer-upper a fun DIY project like restoring an old car or learning to cook for yourself, the kind of activity that lets you put your personal stamp on a property and adds to the pride that comes with home ownership.  Add in the money you could save by buying a house that needs work and you’ve got a winning combination, right?  Right?

The honest answer to that is… it depends.

It depends on what kind of condition the home is in, and what repairs need to happen before it can be considered fully livable.  Remember, a home that needs its wiring redone, or which has only a half-finished second floor, or whose plumbing is suspect may be a long way from “ready to move in.”  You’ll have to factor in not only the added cost of hiring a contractor (or if you really are doing this by yourself, of all tools and materials) but also the inconvenience of having to go elsewhere when parts of the home cannot be accessed.  If you’re new to the area you’re moving into, this may mean shelling out money to stay in a nearby hotel; if your kitchen is undergoing repairs, you may have to eat out for however long the process takes.  Assuming you decide to stay in the home while it’s being worked on, are you prepared to live in a construction site?

Another potential downside to going it alone is the possibility of error.  It goes without saying that mistakes can happen when you attempt a project you aren’t qualified to tackle, but even contractors can make mistakes- what guarantee do you have that the so-called specialist you hire will complete the task to your satisfaction?  Even if he/she fails miserably, you will have no choice to cover the labor they put in, and then pay even more for yet another so-called professional to hopefully right the ship.  Buying a home that has already been fully restored (like the ones we sell) eliminates the risk of a botched job.  We have a tried-and-true system in place, and a large network of reliable contractors… why not let us handle the details while you focus only on enjoying your newly purchased home?
Some people (you may know them as house flippers) have been known to buy fixer uppers hoping to eventually sell them for a massive profit.  You should be aware that performing renovations on a home does not entitle you to add your building costs onto the final selling price- in other words, a home that you purchase for $150,000 will NOT automatically sell for $200,000 simply because you sank $50,000 into restoring it.

The point is, no matter how practical, cost-saving or trendy fixer-uppers may seem, few people realize how much time, effort (and yes, money) can go into the process.  Before you decide to take matters into your own hands, make sure you know what you’re getting yourself into.  If you’d rather spare yourself the hassle and are fine with letting experienced professionals create a beautiful living space for you, give us a call and let’s make something happen.