Valencia, CA

I was attempting to relay a, "Once upon a time" story, but I think it more appropriate to start at the beginning with the text message that spun Paris and I into a spiral of deep conscious thought.

We had sold a nice couples home and are waiting for a home to come onto the market in Southern California that is in a specific area. There might be 80 homes total and with the restriction of Foreclosure Releases and the home values down, it has been quite difficult to get anything available to write on.

Receiving a Text Message asking, "Connor, did we sign a Buyer Broker agreement with you?" - "I don't have all of the answers right now, but I wanted to know."

That is when the spinning started and so did the questions to myself and Paris. What was happening and what would be the reasons to ask such a question?

As the curtain comes up 1/4 way - we see a bit more of the Wizard. This "Wizard" is quite dark, not in complexion but in heart.

The story unfolds as follows: A Friend of our Clients a Part time agent/lender, work associate, etc - approached him at work, our client by the way does not have a Buyer Broker agreement (we are not for pushing those - we explain that we are about loyalty and how important it is to have your own representative so as not to be thrown under the bus), knowing that he wants to buy in a specific area and with a specific home profile - stated that he knows of an agent that has a "secret" listing in the very area with the profile that they want.

He further stated that this agent, his friend, knows of a couple that is going through a nasty divorce and they just want the home sold as a short sale. If he uses this Lender/Agents Friend (the other agent) - they he might be able to get the home for sure.

The other agent called our client and explained the same scenario with a couple of different twists - They don't want the home on the market or MLS - they don't want the home to appear on the "radar" and they want it done quickly as a short sale without any problems.

So I explained a few things. Even if they want the home to be sold at a short sale - there is no reason whatsoever that they cannot have their own representation and our client have us. Also - if this guy is such a good friend, he should know that, unless there is something in it for him.

I also mentioned the fact there are rules regarding having a listing contract within the California Association of Realtor's - this listing needs to appear in the MLS within 48 hours, or appear as an "exclusive" listing within that same time frame.

Another thing that I spoke about had to do with this "friend" wanting to throw our client under the bus without any forethought - and I also opened our client's eyes to understand that once Paris or I find out someone has an agent that they have been working with - they are not available for solicitation. Furthermore, I would never ask if there is a "buyer broker agreement" because that is to me unethical, because the road after that question is dark indeed.

As the story continues to unfold - there are several issues that I can see and I would appreciate any of my Active Rain Friends Input to make sure I am covering all of the bases.

• I am wondering if this agent does not have the listing as of yet and is going to use our client as the sacrificial lamb to take to the owners in order to show "hey I have a buyer, I was not lying, give me the listing"
• Also - It has been my experience that the Banks will identify that there is only one agent on the listing and buyer side - only paying half of the total commission. Unless this other character is going to do some of the writing?

It saddens me that others would take this road - which we would never ever consider embarking on this type of journey, even in this hard market.

Karma, or whatever you believe in, is quite a powerful thing. If you take 100 dollars from someone, it might not be loss of money you get hit with - usually I find it is much worse and from somewhere you did not expect.

Please advise Active Rain and Thanks ahead of time for your comments.

Property Flipping guidelines extended by FHA , until May 2010! What does this mean and who does this affect?

What is property flipping?

No .......it's not flipping your home with another couple as seen in trading spaces on TLC!

FHA GUIDELINES STATE THE FOLLOWING:

Property flipping is a practice whereby a recently acquired property is resold, often for a considerable profit.

Most property flipping occurs within days or a few weeks of acquisition and usually with only minor cosmetic improvements, if any.

While there is nothing illegal with selling properties within days of acquisition, some of these transactions are fraudulent because the condition of the property is misrepresented and/or the value of it is artificially inflated.

Effective June 9, 2008, FHA temporarily waived the property flipping rule 90-day waiting period, for homes that were foreclosed on and being sold by lenders or by property disposition firms on the behalf of lenders.

So if you have a property that was purchased by an individual investor, or investment group, you must must wait 90 days to DO ANYTHING! We can not order an appraisal or case #, we can't open escrow, order title or apply for the mortgage. You can't even draw up the contract, or do inspections or the buyer will be in jeopardy of losing their deposit. There basically can be no record of any sale during that 90 day timeframe.

This has become an issue in recent months because of the lack of knowledge of the guidelines along with the anxiousness of all parties involved. Day 91 is when it can all begin unless the exceptions apply.

We CAN however, apply for the mortgage with a property "to be determined "and get the buyer PRE-APPROVED.

So keep this in mind when you are putting your deal together and expecting your lender to jump through hoops on day 91 and close in two weeks!

The waiver applies to owner occupants only and does not apply to people/entities that purchase foreclosures either singly or in bulk for resale. Subsequent sales of such properties will continue to be subject to the standard regulatory requirements.

The temporary property flipping waiver has been extended and FHA will recognize sales agreements on foreclosed properties signed by the seller and buyer on or before May 10, 2010.

Do you want more BORING but pertinent facts you MUST know if you encounter a flip ????

The only exceptions to the FHA property flipping rule are:

1. Properties acquired by an employer or relocation agency in connection with the relocation of an employee.
2. Re-sales by HUD under its Real Estate Owned (REO) program. There are LOTS out there! And most homes can benefit from an FHA 203k streamline loan!

3. Sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies.

4. HUD REO properties that were purchased by nonprofits at a discount with resale restrictions.

5. Sales of properties that are acquired by the seller through inheritance.

6. Sales of properties by state and federally-chartered financial institutions and government sponsored enterprises.

7. Sales of properties by local and state government agencies.

8. Sales of properties within Presidentially Declared Disaster Areas.

9. The restrictions do not apply to a builder selling a newly built home or building a home for a borrower.

10. The sale must be by the owner of record.

11. Appraisers are required to analyze any prior sales of a subject property in the previous three years for one to four family residential properties.

12. A lender must obtain a second appraisal by another appraiser if:
the re-sale date of a property is between 91 and 180 days following the acquisition of the property by the seller, and
the resale price is 100 percent or more over the price paid by the seller when the property was acquired
FHA reserves the right to require additional documentation from a lender to support the resale value of a property if:
the resale date is more than 90 days after the date of acquisition by the seller, but before the end of the twelfth month following the date of acquisition, and the resale price is 5 percent or greater than the lowest sale price of the property during the preceding 12 months.

Any subsequent re-sales of the properties must meet the 90 day threshold in order for the mortgage to be eligible as security for FHA insurance.

So remember to do your research! We are the professionals and it is our job to know this information for our consumers. We will save time, money and problems if we know this up front.

Happy Selling, buying and financing peeps!

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Give your Home a Selling Advantage
by Joshua Suess
Homeowners are hungry for an advantage - something that can give their home an edge over the competition. These advantages fall into one of two categories: price and condition. But for a great deal of homeowners, prices are already low enough… and that leaves option two.

Compare it to buying a car. If you’re looking at two cars and they both cost $20,000 and one has all the bells and whistles, which one would you buy?

Translation: Before you put your home on the market, make a few simple upgrades. Paint the walls. Plant some petunias. Clear some counter space.

In real estate circles, such changes are called staging. In the same way you might consider detailing your car before you slap a for-sale sign on it, staging your home can generate the additional eye appeal that can lead to results.

Potential home sellers can attempt to stage their own homes or use a professional. Either way, the investment is well worth it. The key is not to get too cute. Home shoppers are looking for potential, not perfection as you define it. Those merlot-colored walls? Cover them with something neutral. The family photos? Save them for your next house.

You need to cut clutter. If a buyer is looking at 10 homes and doesn’t remember your floor plan because they remember the family photos, that’s bad.

Eliminate any indigenous scents; just because you love the smell of fried garlic in your home doesn’t mean potential buyers will agree. Staging is all about presenting your home in the best light. After all, you’re not living in your home. You’re selling it.

Joshua Suess is with the Suess Home Selling Team at Re/Max 702-4640 www.SuessSellsHomes.com

The streamline 203k is a perfect program for REO properties with minimal repairs.

Did you know you can tell the bank that they will not be responsible for the repairs? WOW! The bottom line not to mention the headaches, just looked a lot better! And that FHA buyer that didn't look so great, just went from mediocre to a GREAT offer!

The FHA 203k Loan allows for the client to finance the cost of repairs needed on a property into their mortgage. The repairs are done after closing so this is an advantage to the seller or bank that owns the property because they aren't responsible for the repairs. This is a great negotiating tool for your client who may be up against other offers which would require the seller/bank to do the repairs! Are there any foreclosed properties out there in need of repair? I think so! This is perfect for those REO properties that have missing appliances or plumbing and electrical repairs needed!

STREAMLINE 203k for dummies

The Streamline 203k is for limited repairs requiring little expertise to manage therefore there is no consultant required (Although it depends on the extent of the repairs, I may recommend you get one anyway - It's worth the cost!). It is designed for a "streamlined" project where the home can be occupied immediately after closing, and the contractor will receive a single payment at completion. (Maximum of 3 contractors) The maximum amount that can be financed on top of the sale price for the streamline is $35,000 (which includes some fees/reserve/costs) so assume about 30,000 in actual repairs.

Below are the Eligible and Ineligible repairs for the Streamline K

ELIGIBLE:

1. Repair/replacement of roof, gutters and downspouts
2. Repair/replacement/upgrade of existing HVAC systems
3. Repair/replacement/upgrade of plumbing and electrical
4. Repair/replacement of existing floors
5. Minor remodeling, such as in the kitchen, which does not involve structural repairs
6. Exterior and interior painting - including lead-based pain stabilization.
7. Weatherization: including storm windows and doors, insulation,, weather stripping, etc.
8. repair/replacement/upgrade of appliances (may include free-standing ranges, refrigerators, washer/dryers, and microwaves)
9. Improvements for accessibility for persons with disabilities
10. Repair/Replace/add decks,patios and porches
11. Basement finishing/remodeling/waterproofing (not requiring structural repairs)
12. Window & Door replacements and exterior wall re-siding.
13. Septic and/or well repair or replacement

INELIGIBLE:

1. Major rehabilitation or major remodeling, such as relocation of a load-bearing wall.
2. New construction, including room addition.
3. Repairs of structural damage.
4. Repairs requiring detailed drawings or architectural exhibits
5. Any rehabilitation activities that require more than two payments per specialized contractor
6. Landscaping or similar site amenity improvements
7. Any repair or improvement requiring a work schedule longer than six months
8. Work items that would necessitate a consultant to develop a work write-up
9. Work that would cause the borrower to be displaced from the property for more than 30 days during the time of rehabilitation
10. All items ineligible for the Full Consultant 203k

This works the same way as the Full Consultant 203k program but can be done in less time. We recommend at least 90 days for the Consultant K program and 45 for the streamline.

The banks want to unload their inventory as quick as possible and with the least amount of costs. Educate your clients which INCLUDES the bank about this program and close more deals. This is also a great way to negotiate a short sale if you have a qualified 203k buyer. But just remember -give it the time it needs and set the expectations up front. This is why having a certified FHA 203k Lender with experience with this program is crucial.

This program can also be combined with the Energy Efficient mortgage for those clients that are GOING GREEN!

There are so many options and I would be thrilled to help you find the right program that most people don't even know exist!

Happy Rehabbing!

Carl Reese Construction Santa Clarita, CA
Certified NACHI© Home Inspector • EnergyStar© Partner • Certified Mold Remediation & Testing • Certified Thermographer • Energy Consultant • Licensed General Contractor #B878946