by Tina Merritt

As some of you may know, selling a property you have owned for less than 90 days to an FHA buyer has been virtually impossible for the past few years due to HUD seasoning guidelines.

On January 15, 2010 David Stevens, the Assistant Secretary for Housing, waived the existing guidelines regarding the seasoning issues until February 1, 2011.

To read the amended guidelines, here is the link: 
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

Unfortunately, some lenders are not following these new guidelines and are still holding to the old with regards to FHA loan approvals.

I recommend the following if you are in a situation where you are trying to sell a home you have owned for less than 90 days and find yourself with an offer from an FHA buyer:  inform the lender of the date you purchased the property and offer a list of improvements you have made.  Then, send a copy of the new guidelines and request a statement from the lender's underwriting department that they will honor the amended guidelines issued by HUD.  

One of the key skills you’ll need to learn as an investor is how to structure deals. When you get really good at this, you’ll be able to pull some real magic tricks out of your hat and profit from deals that other investors wouldn’t touch because they can’t figure out how to make [...]

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Are Sellers Rejecting All Of Your Offers?

One of the key skills you’ll need to learn as an investor is how to structure deals. When you get really good at this, you’ll be able to pull some real magic tricks out of your hat and profit from deals that other investors wouldn’t touch because they can’t figure out how to make it work. I’m not there yet…I’m definitely still in the learning stages.  I spent my first year in real estate investing only making offers on bank owned properties, but  once you deal with private sellers it is an entirely different ball game.  In fact, I’ve dealt with lots of rejected offers from private sellers over the past several months.  Sure, sometimes the sellers simply aren’t motivated enough, but I also have to consider how I can structure and present my offers in such a way that I can increase my number of accepted offers.

In case you’re in a similar boat, I thought I would share a few tips that I’m putting into practice that I’ve received from my mentor as well as fellow investors with several more years of experience under their belts working directly with home owners:

#1: Always provide a written offer

It’s easy to think that you’re saving time by giving sellers verbal offers, but frankly everyone likes to “see it in writing.”  Regardless of whether you think your offer will be accepted or not, put the offer in writing and allow the seller a chance to review it and give it due consideration.

#2: Remember cash isn’t always king – give options!

In the beginning, all I would make are low cash offers thinking “Cash is king, right?”  Well, yes and no.  It can be king for some sellers, but not for others because it really depends on the seller’s situation.  Be sure to give the sellers options.  If you ask the seller some key questions (e.g. how much is owed on the property, why they are looking to sell, what they plan to do with the money after they sell) you will be able to determine what types of deal structures could possibly work. For example, your written offer can include a few different options:

• Cash
• “Subject to” (liens remain in place and you take over the payments)
• Seller financing
• Combination of  “Subject to” and seller financing

#3 Consider an option contract

If your intent is to assign the contract and the seller just doesn’t seem to want to meet you at a number you’re 100% confident with, consider an option contract at the sellers price and just go out there and see if you can find a buyer within the option period (get at least 90 days).  There’s no risk!  If the seller’s price is completely unreasonable, you don’t need to waste your time….but if its just a little bit too high for your comfort level, go ahead and get that option agreement signed and see what you can do with it.

#4 Consider a partnership

My mentor gave me an example of a deal he did where there was substantial equity in the property but the home needed a lot of work.  After a rehab, it was going to be an excellent home to sell to a retail buyer. What he did was set up a contract with the seller and they agreed to rehab the property, market it, sell it, and split the profits.  The seller paid the mortgage and carrying costs while the rehab was completed and they both made a nice profit when the property was sold. A win-win for everyone.

#5 Always follow up

Persistence pays.  Even if the offer is rejected now, the seller may have a change of heart later. Be sure to follow up a few months after you’ve made the offer and check in to see how things are going.  I’m currently working on a deal with a seller I made an offer to back in November! This is more common than you’d think.  Don’t miss out on deals because of a lack of follow up.

I hope these ideas are helpful. If you have others, please do share in the comments below!

Image credit: Icky Pic

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Are Sellers Rejecting All Of Your Offers?

For most of you I am sure you remember the days as you were growing up stopping by the local ice cream store and getting a “double-dipped” ice cream cone.  Those sure were simpler times and the thought, even in mid-March, inspires memories of warm summer evenings and special treats.  A Reality Check… And now it seems that the term [...]

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Double-Dip Used To Be Fun and Exciting…

For most of you I am sure you remember the days as you were growing up stopping by the local ice cream store and getting a “double-dipped” ice cream cone.  Those sure were simpler times and the thought, even in mid-March, inspires memories of warm summer evenings and special treats. 

A Reality Check…

And now it seems that the term “double-dip” does not foster memories at the ice cream parlor, but instead visions of continually declining housing prices and more challenges for the economy and real estate investors.

From Warren Buffett whose insight can be obtained in, “Is Warren Buffett Right About the Housing Market Recovery?“ to this article “The Next Wave Of The Housing Crisis: Much More Pain In 2010, 2011” – talking about the continued pain in the housing market through 2011, the message is clear:

Most if not all of the country is going to experience another round of property value decreases and that is where the “double-dip” terminology comes from.  I don’t believe that this is avoidable… so the million dollar question is this…

What Should An Investor Do Next?

This is a question that I know by my various discussions is on almost everyone’s mind. 

For the seasoned investor making the needed adjustments to their business – whether it is going from outright purchasing and selling to lease options or just purchasing rentals – they have been through enough challenges to know they have to adapt their business strategies to the ever changing market.  Adapting is what they do, and that is why they are still in the game!

I talk to many, many beginning investors, and to be frank, they are at a disadvantage; mostly because they have not learned to read their local market in a way that the seasoned investors have.  And, they put themselves under tremendous pressure to get started, but are concerned about choosing the right “formula” for their market and instead of making a choice, even if it is a less then optimal one, often times end up doing nothing! 

Here’s a given!  The housing market in most areas of the country has not stabilized.  As an investor you need to understand where your market is and much more a decline is anticipated.  Below are few things that will help you understand where your housing market it and where it might be going.

1. Look at your local economy and the strength of your areas employment numbers.  Are they going up, down or have they stabilized.
2. Determine the number of mortgage delinquencies in your area.  The higher the number of delinquencies, the higher the probability that more foreclosures are on the way — with the effect being declining property values.
3. Know and understand how long properties are sitting on the market and what the local absorption rate is.  If properties are sitting longer or the absorption rate is increasing, you can anticipate continued value declines.
4. Develop an understanding of your local rental market.  Know what is happening to rents and the vacancy rates within your community.  Declining rents and rising vacancy rates only support further declines in property values.

Sounds great… but where do I find this type of information?

There are a variety of sources.

On the macro level the Case-Schiller Index is a good place to start.  Keep in mind that this is just a starting place, and due to its national perspective, may not be reflective of your local market.

Another source for this data is your local Chamber of Commerce or if you live in a large enough community your local economic development agency.  You should be able to get employment and job growth numbers from these organizations.

Local Realtors are your best bet for the days on market, total inventory on market and the absorption rate.  Also, they would be a great place to uncover rents and vacancy rates within your area.

I am sure there are others, but this should be a good start.

The next action is yours.  And, taking the actions outlined above will allow you determine where the market is headed in your area so that you can make informed decisions. Instead of fearing this “double-dip” you can enjoy and profit from the ride.

Photo: Joe Shlabotnik

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Double-Dip Used To Be Fun and Exciting…

After three years of chasing REO properties on the MLS, I’ve managed to pick up a couple of tips and tricks that I thought I would share with you over the course of the next few weeks.  I realize that not all MLS systems are created equal, so your mileage may vary, but hopefully you [...]

This Article is Copyright © 2004-2010 BiggerPockets, Inc. All Rights Reserved.

MLS Bargain Hunting: Tips and Tricks (Part 1)

After three years of chasing REO properties on the MLS, I’ve managed to pick up a couple of tips and tricks that I thought I would share with you over the course of the next few weeks.  I realize that not all MLS systems are created equal, so your mileage may vary, but hopefully you will find these tips useful when conducting searches and hunting for bargains on the MLS!

Tip #1- Make Your Searches as Broad as Possible

What I have found over the last few years, especially when it comes to bank REO listings, is that the agents are often too busy (or too lazy) to bother conducting any due diligence before inputting a property into the MLS.   As a result, the information contained in many of their listings is often inaccurate.

To give you an example:  One of the first REO properties I wholesaled off of the MLS was listed as a 2/1, when in actuality it was a 3/2.  This obviously makes a huge difference in the marketability and value of the property.  Had I narrowed my search to look for only properties with 3+ bedrooms (which is what most of my end buyers are looking for),  I would have missed out on the deal.

The same holds true when searching for properties of a particular construction. For example, in my market, there is a much greater demand for concrete block homes as compared to wood frame or stucco, and as a result many investors will narrow their searches to bring back only houses of block construction.  In many instances, however, the agent will leave this field blank in the listing, so if you were to narrow your search to look for only concrete block homes, you would be missing out on some potential deals.

To get the most bang for your buck out of your MLS searches, my recommendation is to make them as broad as possible.  When I do my searches for properties in the zip codes or subdivisions that I am interested in, I search for ALL single family homes in those particular areas within a certain price range.  It may take me a little bit longer to sift through all of the listings, but this way I am assured that I am not missing out on any opportunities that may have fallen through the cracks if I were to have narrowed my search.

This is just one of the many tips and tricks I’ve learned while searching for deals on the MLS.  Check back next week for Tip #2!

Photo Credit: Danilo Rizzuti

This Article is Copyright © 2004-2010 BiggerPockets, Inc. All Rights Reserved.

MLS Bargain Hunting: Tips and Tricks (Part 1)

by Donald J. Trump

I am very excited to return to the original premise of The Apprentice. We’ve got to do something about the economy and this is a terrific way to provide jobs as well as business lessons along the way. NBC, Mark Burnett and I hope this economic downturn can begin a turnaround, and we’ll do our best with The Apprentice to see that it starts happening. I’m proud to be putting people back to work, and to positively changing the psychology of America.

Therefore, we are proud to report that casting for The Apprentice Season 10 is now in full swing! Click here for a link to times, dates, and cities for OPEN CALLS!