[quote=SD Realtor]Actually I am not quite in agreement with the statement about flippers. Given the first hand experience we had, pretty much none of what was said applied. First off, homes that were purchased at trustee sales by private parties are harder to obtain financing for in a short timeframe. What used to be only FHA guidelines with respect to a minimum 6 month seasoning before financing could be obtained for a buyer purchasing a flip quickly became adopted by MOST (but not all) lenders for conventional financing. Furthermore the lenders would also want verification on the profit margin being realized by the flipper as well. If that profit exceeded their guidelines they would not finance the home. We stopped our activity by mid 2010 so perhaps things are not as tight now. As with anything, I would like to see some hard data with reference to the statements made above.
Bank owned REO properties and short sales were/are not subject to the same scrutiny for obtaining financing. In fact Homepath financing is almost absurd these days.
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I think the requirement on flippers are good defensive measures by the lenders. The lack of scrutiny on Short sales and REO on the other hand is corrupt but also meets business ethics litmus test. I recent got as up close to a non-arms length transaction as I ever care to do. FHA, no FHA inspection. Homepath financing probably….I don’t now much about that program but it looks too easy. Double sided deal definitely. Well under comps, absolutely. Wink wink by new lender, of course…by everybody. Exclusion of other potential buyers absolutely. Could JP or CAR competed for this house, absolutely not. How do you feel if you are a legitimate equity holding non-flipping seller competing with this?
My conclusion is that the people who ripped out the cabinets, squatted, rented out their houses but didn’t pay the mortgage, and others like this brought the banks to a point where collusion is better in some cases, than exposure to these potential problems or vacancy.
I am really outside of the loop now with real estate, but just thought I would look for a place on Piggington’s to put this in, because I know deal steering has been a frequent topic here. Adam’s post, plus this recent experience has made me believe it is now institutionalized. I am absolutely certain other piggs and most active real estate licensees, could expand on this “wink wink” syndrome in real estate. I believe the seller and buyer were recruited as necessary components for the double sided commission by “legitimate” entities.
In this case,the newly relieved debtors with their instant and permanent tax assessment reduction are back on the conspicuous consumption train.
Eat your hearts out….
Oh yes, I wonder if some piggs have not done this as owners and some as agents, or possibly even together.
