It's a little bit difficult to figure out if a home is offered for sale as a foreclosure flipper in Sacramento. Because when I examine the tax records to determine transfers and who is in title, it might be a mortgage company that acquired title through a trustee's deed. Such a transfer may lead an agent to believe it was foreclosed upon by the bank, but the opposite may be true. It may have been acquired by an investor.
Do you wonder where some of the shadow foreclosure inventory is hiding? Some of those homes are sold to investors who flip them.
When I find a title transfer on a foreclosure like this, I search the name of the entity that purchased the foreclosure home through the tax records and often discover the purchaser is an investor who is buying a lot of foreclosures, either at auction or through a private deal made by the bank. Agents can also get a clue if the listing notes: no FHA buyers, due to the 90-day seasoning requirement.
The nice thing about buying a Sacramento foreclosure from a flipper is the investor will often pay for a pest report, a home warranty and credit the buyer for closing costs or major repairs. Buying a foreclosure from the bank generally means the buyer is purchasing the home in "as is" condition and doesn't offer those types of benefits.
I ran the comparable sales for a Sacramento buyer who was contemplating making an offer on a foreclosure flipper. The comps clearly showed the listed price was under market value by at least 25%. The buyer made an offer, it was countered and he accepted the countered price, which was less than the list price.
Sure enough, when the appraisal came in, it showed the home was worth 20% more than the buyer paid for it. Appraisers are extremely conservative these days and, if they feel pressed, with no other option for value, most of the time the higher appraisals will come in 2% to 3% over the sales price, even if it's worth a lot more. Why rock the boat?
I was stunned to see the appraisal at 20% over the purchase price. Kinda weird to see my professional opinion of value substantiated for a change. This doesn't happen very often.
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you.
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Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
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Your are right. We are seeing more homes that were purchased in bulk from bank before they hit the market. For the most part, they by them at 70% or less of current market value.
Sometimes the escrow companies has to wait to close until all the deeds are property recorded.
Your Queen Creek AZ Real Estate Agent
I am seeing this alot more now (I have sold these types in the past year all cash however!) It seems like the real investor's are buying at the trustee's sales and then flipping. Most do state no FHA allowed in the agent to agent remarks.
Wow, we're having the opposite problem right now. With the HVCC rules, we have out of area appraisers brining properties in significantly UNDER value on a few sales. They cite inability to find closed sales to use as comps and are now using foreclosured properties.
Elizabeth- And you get your commission too! Some of the flippers you can get both ends of the commission also. :)
Be careful... "overvalued" property can cause heart burn for the underwriter... which is ridiculousto me but it is happening. Many of our investors who are flipping are targeting VA borrowers because there are no seasoning requirements. It is nice that your client is getting a deal!
Elizabeth,
It is great that you were on point and that your client is still getting the deal that they are.
With values all over the place getting to an accurate value is more difficult in this market. Nice job.
Sooo many SS stories...we had one recently....the bank insisted on more money BEFORE their appraisal and then had to back done to what we told them to start with...duh !
Elizabeth - It is odd to have a normal seller and not a bank or short sale. It means actually inspecting and doing repairs based on the inspection results. How soon we forget! The anti-flip FHA regulations are troublesome, but moreso are the arbitrary decisions of underwriters on conventional loans. They can deny on the basis of a flip ... or not. It is frustrating - especially on one that we are involved with where the buyer is putting 20% down. There is no value fraud issue to protect.
Re.- your friend Joe, Biz Journal, that moved to Gardnerville - what's his last name? We can keep an eye on him for you. We are still a small town and we take care of one another.
Hey Jim: It's Vanacore. He's quite the colorful character with a wonderful sense of humor.
RE: conventional loans on flippers, our sources have dried up. I put one flipper into escrow the last week of June on a conventional loan. We had to redraw the contract in July and start over.
Chris Stahl with Vitek was telling me about this on one of his transactions...was this your client??
Erin: Nope. There are enough of these to go around these days. Almost every single one of my buyers right now, especially the short sale buyers, are getting appraisals above their accepted offers. It's the reverse of what's happening elsewhere in Sacramento.