I found this question the other day while browsing Trulia Voices. I used to participate in answering portion but have since backed off. It has gotten to “salesy” from the agents answering the questions or problems that consumers have when purchasing or selling real estate are all the same.

I also use it to help better myself off when it comes to the list of “things not to do”.

I’m not sure how a listing agent can just forget to submit an offer and openly admit it but one would think that he/she will have quite the problem on their hands after a debacle like this. The home buyer on the other hand, probably won’t get the house they want but could file some grievance with the local board, contact the broker where the agent works, get a hold of the department of commerce or contact HUD directly.

Most REO agents locally have more listings than they can handle. As a buyer, make sure you drill your buyer’s agent on the history of the agent because there a lot of REO listing agents that have carved out a not so good name for themselves.

Its unfortunate that this type of behavior goes around but the only way to put it to bed is for people that are victims to do something about it. Otherwise this lackadaisical behavior will continue

Although the housing tax credit has provided a good incentive for buying a home, don’t be hard sold into buying a home because of it. Inventory in some price points are low right now so don’t make a decision you might regret later on down the road just to cram in a purchase by the tax credit deadline (April 30th).

The flipper’s paradise has returned and is in full effect around the Twin Cities metro area. It appears that it is 2002-2006 all over again when it comes to “turn and burn” real estate for property flippers. Not only are the lower-end properties hard to grab, most buyers area finding themselves competing with wannabe seasoned real estate investors on cash deals looking for quick profits.

Quick basics of a flip is to buy low and sell high to maximize profit without putting in a lot of capital in out of pocket. Let’s all admit that all of us have at least glanced at one of the episodes on television about people making six figures in one deal.

A lot of distressed properties that are rehabbed don’t actually make the final grade in what a buyer is looking for. Most seem fake.

Most Flips Miss

All flips follow the same flow. Cut corners on the less noticeable (roof repairs, trim work, etc) and dump money into the eye catching features (kitchen appliance, granites, et al). Almost all flipper’s hate spending money on practical items.

Here’s a quick list of some characteristics to watch out for:

1. Kitchen Appliances: Most flippers have connections with local vendors offering ’scratch and dent’ appliances, watch out for noticeable damage. Even if
2. Vanilla in colors. All those training videos tell real estate investors to use neutral colors to appeal to the broader audience. The color of choice seems to always be light tan.
3. Consistency throughout the property is a problem. Mix-matching finishes like flooring, carpet, tile, cabinets (kitchen/bath). I think the reason is they ran out products to choose from on the discontinued rack. Cutting corners once again.
4. Cheap windows, these are used because either they where retro fit in the current opening or because someone broke in. Check how they slide, some might have been installed wrong and therefore brute strength is needed to open. Also, faulty installation can cause a mess with water intrusion.
5. The carpet is cheap. Sure it is brand new, but the quality is at the bottom of the scale. They use a upgraded pad to make it feel better than what it usually is. End result is the carpet wears a lot quicker.
6. Travertine and Brazilian cherry floors don’t solve everything.
7. Ever walked into a rehabbed house with staging? It doesn’t happen that often, but this usually means that they have done this thing before. Why? The real estate investor knows that a well staged house usually sells faster and draws eyes away from the real problems. Remember first time flippers are really trying to cut corners and typically don’t want to pay for home staging.

Fundamentals Need To Be Addressed

There is no joy in updating a roof, siding or simply upgrading the furnace along with the HVAC systems. This everybody knows, but fixes like these are often over missed and are small  aesthetics for buyer’s.

Be on the lookout for the small things: caulking around bathroom fixtures, repaired cabinetry, trim (mitered corners, chips in the wood, dated), stain carpet cleaned but not replaced and other eye sores.

Moving walls or adding spaces can be much more functional as an end result. A lot of homes are older and not not kept up with today’s trends.

I’m no professional flipper, but I would like to think that I know what buyer’s want. Perhaps most flippers lose focus and only worry about the potential cash made from the property. A little time spent on the smaller things might create a quicker sale.

Be Cautious

Ask for disclosures. Property flippers don’t want to give these out. They will probably only issue a limited warranty for title meaning that they *only* know what they know from the time the property was first purchased.

True story and not uncommon, I was able to dig into one property for a client and found out there was mold prior to when the property was bought by the investor. It turns out they admitted to it being a small amount, but only to find out it was part of major cover-up. You see, all they have to say is there was mold, it has been taken care. The question is, how much mold damage?

Before pictures would be nice. If they just bought the property, odds are the buyer’s agent will have access to the prior listing photos giving you an idea of what the property looked like when the investor purchased it.

Just make sure to explore all due diligence, get an inspection.

Get Over The Shiny Objects

Seeing past the bright shiny objects is the key to spotting if flip has flopped. Make sure the property fits what you, the buyer is looking for. Just because the property has all the latest and greatest fixtures doesn’t mean that it is the best.

Find something that has value.

It’s hard to find a flip done right, most are simply half-assed.

How many Twin Cities home buyers have been disappointed because they can’t compete with local real estate investors on buying properties? Beaten out by that all cash deal or better structured offer on paper?

I know a lot of buyers that I have worked with over the past year have found themselves coming up short on REO properties. Getting beaten out on the deals by flippers that are in the know of properties that are sold before they even hit the market or right away because of the offer that real estate investors are able to put together.

If you are an owner occupant and not an investor then good news has arrived.

Along Comes Fannie Mae First Look Program

Fannie Mae has announced the release of a program called “First Look” that allows home buyers to have a their purchase agreements looked at first before non-owner occupants (aka investors, flippers, speculators, et al). The time period is 15 days for these offers to be consider before property investors.

The overall goal of is to provide more stabilization to the neighborhood where the property is located. Many feel that investors/flippers bring more blight to the community because they are interested in a turn and burn profit, when they really don’t care who moves into the property or are looking for a quick profit. Having an owner occupant can sometimes mean more stability than a renter.

You can find a list of Fannie Mae owned properties in Minnesota at Homepath.com.

Currently on the market in the seven county Twin Cities metro area there are 135 properties for sale under $40,000.

Counties included:

• Dakota
• Hennepin
• Ramsey
• Washington
• Scott
• Anoka
• Washington

Click here for the list

Well it has to be somewhat official if Obama sign’s it right? Like it or not, agree or disagree… it’s on again until April 30th 2010 with closing no later than June 30th 2010.

It seems like this ‘tax credit thing’ that will never end. Remember that $7500 tax credit from last year that had to be repaid? It then morphed into the more popular version $8000 housing tax credit that didn’t have to be repaid. So much for the use it or lose it stance if it keeps getting a second or third life

The Expanded/Extension Home Buyer Tax Credit Details

Anyways, some things remained the same others changed a little bit.

• You must have a signed purchase agreement by April 30th 2010 and close no later than June 30th 2010. Armed Forces personnel are given special exemption: Contract executed by April 30th 2011 and closed by  June 30th, also must be deployed outside of the United States for at least 90 days.
• The $8000 remains the same for first time home buyers or up to 10% of the purchase price of the home
• Kicker this time around is that it is also available to ‘move-up’ buyers up to $6500 if they have remained in their homes for the past 5 out of 8 years.
• Income limits have been increased from $75,000 for single and $150,000 for married to $125,000 and $225,000 respectively.
• No go for second home buyers or investors, better luck on the next time.
• Make sure to keep *put* in the house for 36 months or more or the IRS will come calling asking for a payback of 100%
• Hey look, they forgot to add fraud prevention in the last one… but not this time around.

Has The Housing Tax Credit Worked

Some argue it has (mostly industry related professions. cc: realtor’s, loan officers, etc), others say it hasn’t done much but leveraged the future. Sure more people might be swayed into getting out of their existing home, but I can’t believe $6500 is going to do it and if it does, then what come?

A survey conducted by PEW Research claims 85% of home buyers would have bought a house anyways and the stimulus has been unproven so far with mixed results.

Many complaints of the first time home buyer tax credit has been just that, available to only new home buyers. In the Twin Cities area, 2/3’s of all homes that have been sold in 2009 to date have been homes under $200,000. Even though inventory is down and some would argue a seller’s market in some price points, the move-up homes are the ones that are sitting. Luxury homes, is just another story.

The winter is always slow, this might provide a little jolt into the spring season.

I know my opinion doesn’t matter but have been against it since the inception. Let the market it works it way out and now the chance of the tax credit costing an additional $11 billion dollars and subsidies raise prices.

Would much rather have a low interest rate.

The bad part about this is that people might be buying homes based on getting the tax credit when they really should be doing something else. It’s creating a false market and only delaying the inevitable.

Also, it provides no real incentive to buy a home until April 30th. Why? Just stick around and watch the market for a couple of months to see what happens. If prices start to fall again, you made the right choice. If not, you guessed wrong but any ‘expert’ will tell you it’s pretty hard to time the market.

Just my 4 cents.

Oh well, let’s go find a house!

Just rememba, I’m no tax pro. If you need tax advice consult a live person, stay away from the box.

Easily put, it’s in the works.

It appears that legislators have come to terms to expand the housing home buyer tax credit until the end of April and make it available to ‘move-up’ buyers or repeat buyers.

The income limits would also expanded to $125k for single buyers and $250k for married couple.

Nothing set in stone yet, I’m not even sure if it is a bill yet and it hasn’t even been voted on yet so be careful of what you hear. The legislators have come to terms only.VERY IMPORTANT TO UNDERSTAND THAT IT IS NOT A DONE DEAL! It’s just being discussed at this point.

As of now, the tax credit still expires on November 30th at 11:59 but lets hope no one pushes their closing that late

But if it does…

Looks like Realtors everywhere will rejoice and NAR will win their lobbying efforts or Twin Cities home buyers have a little more time to use the housing tax credit.

More deets to follow

Here comes that push to get lawmakers to extend that $8000 first time home buyer tax credit or maybe available to all home buyers with increased return of $15,000.

The housing tax credit has seemed to work, but what many can only view as helping the low end of the market buyers.

So I get this email from ‘the NAR’, yes that some association that claims every day it’s a good time to buy a home. They have a pre-written letter/email for me to send of to my local congressmen only to probably get some heartless letter back.

Here it is in all it’s glory:

Subject: Homebuyer Tax Credit: Extend and Expand

Dear [decision maker name automatically inserted here],

As a Realtor and a constituent, I can assure you that the $8,000 first-time homebuyer tax credit has definitely been a success.  Homebuyer interest and housing sales increased almost as soon as the ink was dry on the tax credit legislation.  Today’s lower prices and interest rates appeal to consumers, but it’s been the tax credit that has attracted people to open houses and to homeownership.

That progress could grind to a halt sooner than you think.  Congress must act NOW to extend the credit through 2010.  Otherwise, uncertainty will return and the market might again be frozen — possibly as soon as October.

A homebuyer is eligible for the tax credit only if the home is “purchased” before December 1, 2009.  That means that buyers have to find a house, complete a contract, satisfy any contingencies, secure financing and go to closing by November 30.  Accomplishing those tasks by November 30 will become more difficult with every passing day.  In today’s market, it generally takes between 45 and 60 days to go from contract to closing.

The market has improved, but it has not yet fully corrected itself.  The credit needs to be extended for an additional period of time and expanded in order to build upon the progress that’s been made. Uncertainty about the future of the credit will dampen consumer demand.  The best way to assure continued housing activity is to extend and expand the credit and to do that NOW.

We can’t wait until late in the year to see what happens.  Consumers will drop out soon if they can’t predict what’s in their future.  Please act NOW to extend and expand the credit through 2010.

Sincerely,

Jason Sandquist

So what do you think, should it be extended or let it expire?

Update 9/16/2009: I found this that came across the associated press earlier today about the White House thinking about extending the housing tax credit.

According to this interactive graph on CNN and data pulled from the treasury department a total of 6,964 home buyers have taken advantage of the $8000 housing tax credit.

Not sure how they arrived at the numbers, whether it has been home buyers that have already filed or numbers used from mortgage data. Maybe someone can chime in