Category Archives: First Time Buyer

FHA Extends Anti-Flipping Waiver

FHA-Anti-Flip-Waiver

The Federal Housing Administration (FHA) has extended its temporary “anti-flipping” waiver an additional 2 years.  It will expire unless extended on December 31, 2014.

This is good news for Investors since they can purchase and renovate foreclosed and abandoned homes and resell the updated properties within 90 days.  Before the waiver FHA has imposed the  90 day standard to rein in rampant quick-flips of homes were investors made minimal or no improvements.

The Dept. of Housing and Urban Development (HUD) announced Friday it is instituting a one-year moratorium on the Federal Housing Administration (FHA) 90-day anti-flipping rule.

 

With certain exceptions, such as HUD-owned and bank-owned properties, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. However, beginning Feb. 1, buyers may use FHA-insured financing to purchase properties resold through private developers and investors, providing access to a broader array of recently foreclosed properties.

 

Under the temporary waiver, all transactions must be arm’s-length, and most properties will require additional documentation of improvements and justification of the price increase. Additional documentation may include a second appraisal and a property inspection ordered by the lender.

C.A.R. recently submitted a letter to FHA Commissioner David Stevens detailing the challenges facing many home buyers using FHA loans, such as the lack of housing inventory available to FHA buyers, and the need for this rule to be revised to reflect current market conditions. The reexamination of the 90-day anti-flipping rule was passed as an action item during C.A.R.’s board of directors meetings in October.

Source CAR.org

If you are looking to purchase an investor flip home proceed with caution and be sure to understand fully what was done to the home.  Some investors put a quick coat of paint and cheap improvements leaving serious deferred maintenance hidden from view.  It’s a good idea to find out if the Investor has done multiple flips and what their reputation is for quality work.

It’s critical to hire a professional home inspector to determine the present condition of the home.

Photo courtesy of Flickr

San Diego Foreclosure Update

Look on the bright side, or the dark side!

According to article on Foreclosure Truth you can choose how you want to view the current real estate market.

Compare these two headlines:

Case-Shiller Home Price Index Ends 2011 With New Lows (February 28, 2012) *

Home Affordability Index Hits Record High (March 7, 2011) **

Throughout the housing crisis, the headlines have focused on the precipitous fall of prices and the resulting plight of homeowners who are underwater.

There is no doubt that the crisis has taken a huge financial and emotional toll on millions of families as the home price index has continued to decline – but it has also created opportunities for many first-time homebuyers, and for the investors who take the financial risk to restore distressed properties and make them available to buyers as the affordability index has risen.

There is an opportunity in every market shift.

To Syndicate or To Not Syndicate

A local San Diego brokerage, ARG has announced they are the first broker in San Diego to pull out of listing syndication.

I am not going to go into great detail on this site which is consumer orientated.  If you want to know more please visit an excellent article by Lily Leung with the San Diego Union Tribune.  She has also posted some consumer reaction to the announcement here.

Fred Glick makes several important points in the video below about ARG’s announcement which focus on Zillow, Trulia, and Realtor.com.

First, that the underlying message is to call the listing agent, no one else will know more about the property or represent you better.  Sounds like dual agency to me.

Second, that the seller should be concerned and not allow his or her listing to be syndicated on Zillow Trulia, or Realtor.com, the three largest consumer real estate sites on the Internet.

What are your thoughts?

What Does “As Is” Mean?

Posted today on the California Association of REALTORS® blog is a discussion on what “as is” means in California.

A lot of REALTORS® have seller clients who want to sell a property “as- is.” In the current market where there are a lot of REO sales, most agents are familiar with REO addendums that state in some fashion that the property is sold “as-is” with no warranties. Some REALTORS® wonder why C.A.R. does not have an “as-is” addendum.

In a state like Alabama, saying a property is sold “as-is” has real meaning. If a seller sells a property “as-is ” it is like saying “buyer beware” and the seller then has very limited disclosure duties. This is NOT the way it is in California.

A property sold “as is” in California basically means that a seller will not be performing any repairs or improvements to the property being sold. “As-is” does not relieve the seller of having to perform his many disclosure duties under California law including the general duty to disclose in all real property transactions (not just residential 1-4) all known facts which materially affect the value or desirability of the property. This provision applies to all sellers including REOs.

A potential buyer of real estate in California should make an offer on the property in “as is” condition. Of course if something new happens to the property since the date of offer and the close of escrow, the seller would be obligated to repair the damage. The Residential Purchase Agreement is written with a paragraph that states the property is sold “in as” condition – or present condition.

This does not relieve the seller from making full disclosures on the Real Estate Transfer Disclosure Statement and hopefully the Seller Property Questionnaire of the properties condition.  Non-disclosed items that are not apparent almost always result in some re-negotiation of the purchase price.

The buyer will also have a right to present a Buyer’s Request for Repair during the inspection contingency period.  The Seller is not obligated to accept the requests or may choose to counter them.  The buyer will then have cancellation rights, accept the new terms, or can decide to move forward with the purchase.

Photo courtesy of Tom Hodgkinson via Flickr

 

What Is The Mills Act?

Vila Montezuma San Diego Historical Homes

Coutesy of Wikipedia

Mills Act Offers Tax Abatement.

I have an interest in historical homes and often run into property that is designated as being in the Mills Act.  Aside from what is commonly known about the property tax savings, I thought it might be useful to pull together some information on the Mills Act of this tax abatement program.

The Mills Act (copy) was enacted in 1972 by then Senator James R. Mills who was from Coronado.  The purpose of the act is the preservation and restoration of qualified homes and building owned by private parties.  In exchange the owner gets a tax abatement.  Each County establishes criteria for the Mills Act and how many contracts they will have.  Contracts are signed for 10 years initially and run with the property if ownership is transferred. Thereafter, contracts are renewed automatically on a yearly basis.

The new owner of a Mills Act home would be obligated during the remainder of the term of the contract, which could be up to 10 years according to the information on the California Office of Historical Preservation.

A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the local government and the property owner for a minimum ten-year term. Contracts are automatically renewed each year and are transferred to new owners when the property is sold. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions identified in the contract. Periodic inspections by city or county officials ensure proper maintenance of the property. Local authorities may impose penalties for breach of contract or failure to protect the historic property. The contract is binding to all owners during the contract period.

The Mills Act is voluntary and saves an average of around 50% on accessed value of the property.  In 2008 under the City reform a $492.00 inspection fee was to be paid every 5 years.  There was much controversy on both sides with owners saying it less attractive financially, while proponents argued it would make sure the owners were preserving and/or restoring the home.

According to an article on SignOnSanDiego the City has approximately 1,005 homes have an agreement for the Mills Act.  The City started billing participants in 2009.  The inspection fee pays for City employees to determine if the owner is living up to the contract.

In 2009, the city’s historic homes division sent its first wave of bills to 200 of the 1,005 property owners in the Mills Act program. None were sent in 2010, but another 200 were sent in 2011 — likely explaining why some were confused to receive a request for payment this year. The department in charge of historic homes lost a senior planning position in 2010, which affected the process, said Cathy Winterrowd, principal planner and liaison to the city’s Historic Resources Board.

Contact information for the State of California can be found at this link including other communities in San Diego that participate in the Mills Act.

Established Historical Districts include:

  • El Prado in Balboa Park.
  • Old Town State Park.
  • Theosophical Institute in Point Loma.
  • El Pueblo Ribera in La Jolla
  • Gaslamp Historical District.
  • Greater Golden Hill Historical District.
  • Chinese-Asian Thematic District.
  • Sherman Heights Historical District.
  • Grant Hill Park Historical District.
  • Bishop’s School Historical District La Jolla.
  • Auxiliary Navel Air Station Brown Field Historic District Otay Mesa.
  • Talmadge Gates Historical District.
  • Shirley Ann Place Historical District.
  • Naval Training Station Historical District.
  • Ocean Beach Cottage Emergine Historical District.
  • Burlingame Voluntary/Traditional Historial District North Park.
View, download or print San Diego City Historical Map by clicking image below.