HUD Loans for Flipping Homes?
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HUD No. 10-011 |
FOR RELEASE |
HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS
Measure to help bring stability to home values and accelerate sale of vacant properties
WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.
“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.
In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.
The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
New Law For Foreclosures in Effect for Nevada
During the last legislative session in the State of Nevada, Assembly Bill 149 was introduced and finally passed. This bill changes NRS 107 by restricting the mortgage holder’s ‘power of sale’ with respect to an owner-occupied house. This bill give the homeowner the right to request mediation for loan modification. Once a homeowner requests mediation, the mortgage holder’s action taken to sell off the property under foreclosure must be stopped. The mediation session, which can last up to 4 hours, must be conducted by a senior justice, judge, hearing master or other designee pursuant to rules adopted by the Nevada Supreme Court. For more information, call us today!! New Nevada Foreclosure Mediation Process will be helpful after you speak with us–we can summarize the procedure for you!
State of the Northern Nevada Real Estate Market
The second quarter report was recently published by the Northern Nevada Regional Multiple Listing Service (NNRMLS). After reviewing the information, I thought this would be of interest to you. It includes data for each of the counties within our MLS area. To review the report, click here: Market Watch Report 2nd Quarter 2009. Thoughts and comments are always welcome.
Home Staging–Why?
We are avid believers in staging a home BEFORE it is put on the market for sale. There are numerous “home stagers” out there, so do your homework and research.
We are frequently asked “Why should I stage my home? Time on the market is so long now and I still have to live here.” Our answer is “THAT is EXACTLY why!” Price and presentation are now two of the most important elements in selling a house.
There is an enormous amount of inventory and your competition might be mostly bank-owned properties. That is where price comes into play. Daily we hear “But my house is in much better condition than any of the bank-owned homes, so we have a right to price alot higher.” Maybe and maybe not. Your home must say, without a doubt to a potential buyer, “Hey, look at me! I’m gorgeous, well-taken care of, my landscaping is supreme, and I don’t need any “improvements”. I’m in move-in condition!” What makes your home deserve a price tag of $10-20,000 or higher than a bank-owned property? The key here is to impress upon the buyer that the “improvements” needed on the bank-owned homes will, in the end, cost MORE than your current asking price. Make sense?
So, again, why stage your home? Because everyone looks better “dressed up”. Your home must be dressed for success. Flowers, opened window coverings, and dusting just doesn’t “do it” anymore.
Take a look at this staging:
Before:
Family Room
After:
Family Room
Do you agree that made a HUGE difference? If you are interested in home staging and agree this would be beneficial for you, just contact me at Debra@GarberandGarber.com and I’d be happy to discuss the endless possibilities for you.
Selling a Home
“Getting The Most Money For Your House in The Least Amount of Time”
The past few decades have made the process of selling your home more complex and involved. With the advent of “buyer’s rights,” sellers are legally bound to know all public information regarding their specific piece of property. There are several mandatory disclosure forms that must be completed in full and signed by the seller. Without full knowledge of these items, the seller may be a target for legal action by the buyer.
Utilizing the services of a professional REALTOR® cannot be disputed. Your REALTOR® not only manages and supervises the full transaction, but also will market your home in unique ways designed especially for you.
As you prepare to sell your house, it is important to remember that this process is actually a business transaction. So, as difficult as it may seem, try to remove all emotions from the sale of your house. For example, remember that you and your family make a “home, ” whereas the house is the building. Refer to your “house for sale” rather than “home for sale.”
Now that you have selected us as your professional REALTORS® to manage and supervise the selling of your property, here are specific tips to assist you in receiving the most amount of money for your house in the least amount of time.
PRIOR TO LISTING:
- Determine the reason for selling your property. This may have an effect on the price you set for selling your house.
- Determine where you want to move: think about schools, jobs, proximity to medical facilities, worship centers, traffic, markets, etc.
- Decide how much time you will need to actually pack and move.
- Start getting estimates from moving companies.
- Decide how soon you can relinquish possession to the new owner.
- Walk across the street and look at your house from a buyer’s perspective. How is the curb appeal? Does the paint need touching up? How does the landscaping look? Are there malfunctioning sprinklers? Are the gutters clean? Is there excess “stuff” stored on the side of the house? In other words, is there anything that could be considered an “eye sore?” Does the door bell work? Is the door mat worn?
- Next, walk through the house, room by room, and objectively inspect as a potential new owner. Operate all of the appliances (make sure everything works as intended); inspect the interior paint (look for cracks, chipping, missing paint, dirty paint); look at the carpet and flooring; are any rooms (i.e. kitchen or bath) dated; are the windows clean? Are there any pet/smoke/cooking odors? Look at the little things such as the switch plates, light bulbs, etc.
- Gentlemen, tidy up the garage the best you can. Try and clean the driveway if there is excessive build up of oil and grease.
- Make your house as clean and immaculate as you can. De-clutter, clean, paint, repair or replace should be your new motto until the house is in top condition. It should sparkle and smell fresh. Don’t forget to clean the light fixtures!
- Make your house look livable, not sterile
- Make it appear inviting and comfortable.
- If you have a lot of sentimental items, collectibles, and/or knick-knacks, start packing now. Get some moving boxes and start packing away items you do not use at least weekly and things you do not absolutely need to have around you. This will allow the potential buyer not to be distracted by your personal items, and will permit them to see the house and envision their personal items in place.
- Any personal property not staying with the house needs to be removed as soon as possible. After all, if you love it, there is a good chance a potential buyer will also and assume it is included with the sale price of the house.
- Inspect the house often for cobwebs on ceiling fans, in corners, on light fixtures, and windowsills.
- Make sure closets and cupboards are neat. Potential buyers will open them and inspect for spaciousness. Nothing is more deterring than to have items fall out onto the floor when doors are opened.
- Clean out the refrigerator and take out the trash daily.
Remember, de-clutter, clean, paint, repair or replace should be your new motto until the house is in top condition. It should sparkle and smell fresh. As a seller, you must realize that what is important to you may not be important to a prospective buyer. What is important to them is what’s important right now. Most buyers cannot see how the house could be, they visualize it as it is. So make the most of the de-clutter, clean, paint , repair or replace ideal. It has been shown that as little as $300.00 in cleaning or repairing saved $3,000.00 in negotiations.
DURING THE LISTING: VIEWINGS
Once you have completed “de-cluttering, cleaning, repairing, and replacing”, it is time to showcase your house for viewings. Understanding that a major part of selling your house for the most money in the least amount of time is pricing it at fair market value, showcasing your house for potential buyers is equally enticing.
For your consideration, below are some suggestions that may assist in making your house as inviting and comfortable as possible:
- If you have an entry way or foyer, fresh flowers can be a very nice touch and present a “welcome atmosphere “;
- Turn the lights on in each room;
- If it is the appropriate season, have a fire in the fireplace; otherwise, try candles or plants;
- Place candy dishes out and fill with mints;
- Have soft jazz or classical music playing faintly in the background;
- Make the dining room table look inviting by setting a few place settings;
- If there is a reading chair, place a book on or near the chair to emphasize the coziness;
- If there is a fountain near the front door or entrance, have it operating;
- Place fresh towels in the bathrooms;
- Make sure there are plenty of current flyers inside the home;
- Think safety: if necessary, de-ice walkways/stairs; remove throw rugs; remove all clutter from stairs;
- If there is a security system, make sure your REALTOR® understands how to properly operate it;
- Open all window coverings to allow for more light;
- Take care of pet odors; the best place for a pet during a viewing is at some else’s house;
- If your house is being shown during the winter season and you work, put your lights on a timer;
- If it is summer and your house has a cooling system, be sure it is on and set at a comfortable temperature;
- Always say YES to a viewing appointment-even if the house isn’t perfect;
- Do NOT allow REALTORS® who claim to have contacted your REALTOR© unless your REALTOR® contacted you personally to inform and confirm with you;
- Do NOT allow into your house walk-ups who say they are inquiring about your house. Refer them to your REALTOR®;
- NEVER show your home by yourself-ALWAYS have your REALTOR® present;
- If you are present during a showing, please do not speak with the buyer(s) or the buyer’s agent-let your REALTOR® handle the questions and only help if your REALTOR® requests it.
ACCEPTING AN OFFER AND CLOSING
This is the big day!! When listing your house for sale, you should have developed® a plan that will allow you to relocate to interim housing should you receive an offer “you can’t refuse” or multiple offers on the same day. Most buyers are anxious to move into their new house and typically request either a 30 or 45-day escrow. At times, a 60-day escrow may be requested, especially if the new owner is selling another house.
In order to properly close, all paperwork must be in order, signed and dated, all inspections completed and repairs or replacements must be finished per your sales agreement. As a seller, be aware that the buyer is entitled to a final “walk through”. This activity allows the buyer(s) to verify that all requested repairs or replacements have indeed been completed. This usually is scheduled for 5-7 days before closing. This is an excellent time to gather all the warranty and information booklets on the furnace, air conditioner, garage door openers, appliances, spa/pool equipment, irrigation system, etc. before they accidentally get packed.
At the closing, numerous documents, commonly referred to as escrow papers, will be signed, checks exchanged, and the house keys will be surrendered to the new owners.
CONCLUSION
It is our sincere hope that this information has proved to be helpful to you during this often exciting and stressful endeavor. Because this is a business transaction, listen closely to your REALTORS® and ask lots of questions!
Our job and responsibility is to get you the results you wanted: the most money for your house in the least amount of time. It is important to keep in mind that current market conditions fluctuate daily-as quickly as every time a house in your current neighborhood sells or goes on the market!
During our appointment, we will provide you with more information and specific suggestions for marketing your house. If you are serious about selling, and the buyer is serious about buying, we know how to sell homes!
