fyi: i bought a house, did all the work needed within a couple months , had a buyer & could not sell because the government is getting involved in regulating any hud, VA , or FHA. loans to force the sellers to hold title for up to one year. this particular one was able to close after 6 months, but I had to pay the mortgage, taxes, insurance, & utilities through the winter. Just thought some people might want to know that. beware.
Rob
HUD loans aren't designed for flippers. how'd you pull that off?
The government is and has always been "involved" in government- housing program loans for some strange reason. I'm sure those restrictions were available for you to be aware of at the time you financed the house on those terms.
And another one who watches too much HGTV without bothering to read the regs comes in crying. IT'S NOT FAIR!
Steve
I was the seller & bought with cash, the buyer used a FHA loan. Just forget I tried to offer anyone any advice.
When you listed it for sale, could you have put a restriction such as 'no FHA loans'?
Not every flip makes someone rich, but it comes down to value and what you can/will pay. Besides, if the person did not do the repairs for a flip, could the buyer afford to do it?
If YES, he should have done it himself and saved a lot of money.
If NO, he should thank the other person for making a nice house available to him.
Don't you just love capitalism when it works?
Yes, but HUD, VHA, and like programs aren't about capitalism. They are, at heart, socialist programs.
I'll admit that I though OPs problem was they he wasn't allowed to sell the house w/out a penalty because of the terms of HIS loan, but I'm still not prepared to be outraged.
But is capitalism all about using government subsidized loans? Good on folks for enterprise, but should they get to snatch up subsidies too? So much for being risk-taking enterprisers.... :-/
And I don't know if it works that way - either a house that can be move-in livable fixser that a bootstrapping low income person should want, vs. a flip, so a buyer should be happy to have it all done.
First off, a flip has a lot of stuff that is a matter of what moves in a market, not what an individual lower income buyer may care about. Maybe that bathroom really needed to be fixed (but the perfectly functional harvest gold fixtures could have stayed), but does the linoleum kitchen floor really have to go - it's functional.
Secondly, I doubt that flippers only take the lost causes (really bad fixers) - naw, they pick up the easy fixers and turn them around. Just what a low-income buyer, who needs to work on a house while living in it, would want instead.
Flippers get to live somewhere else while they work, they get benefit of a lot of experience and connections, and they make the houses into something over the heads of a lot of folks who otherwise could buy the house. I mean, good on them for their enterprise and their work, they do have good benefits to neighborhoods as well. But that's not what the FHA loans are for.
Banty (tired of capitalists who are capitalists until they discover they don't qualify for some gub'ment bennie then it's waaah waaah waaah...)
I have since closed on the home a few weeks ago to a single mom with 2 kids. She has called me twice to ask me questions & I have gone over and helped her out. Not that it matters but she's also about twice my age. So I am not in it for the ass. There are people in this world that aren't self centered pricks. I guess if you could all of us... I make: "one".
Can't quite parse your last sentence, but anyway...
No need to take it personally. My response was to Edwin's statement about 'capitalism' wrt to the FHA loans.
Sounds like you're a nice guy, but still, you *are* in it to make money, right? Again, that's not a bad thing.... just not what the FHA loans are set aside for.
Banty
could = count
Ya, but you knew that when you signed the papers.
Flipping a house; does not mean 'helping" the buyer after the close. You got maybe to emotional in this house. Get in and get out, close up the deal.
If you do get "in it for ass", pre-qualify the buyer. Insist on a pre-approved letter from the lender.
You paid cash for the house and fixed it; sold it being aggravated by government, Why not be your own BANKER?
-- Oren
"My doctor says I have a malformed public-duty gland and a natural deficiency in moral fiber, and that I am therefore excused from saving Universes."
The loans are made available for the purchaser, I can't see a single reason why the FHA would care how long the seller owned the home.
COME TO MY SEMINAR!
We hear this all the time re: real estate.
We are led to believe by HGTV and others that flipping houses is as easy as reconditioning hammocks. And every one pays off BIG TIME.
They don't tell you the downsides.
And the only ones that really make money are the ones who PUT ON the seminars.
COME TO MY SEMINAR! Only $999, includes lunch. Guaranteed to show you things you could have found out for free, but were too stupid to do in the first place.
Steve
I have heard that that is a bad idea, but generally a contract provides a time limit of maybe 45 days for the buyer to get a mortgage and close.
If the buyer couldn't close for some reason, why couldn't the seller go find another buyer after the contract expired?
Let's put it another way. These programas are designed to help people buy homes they intend to live in, and not to enable them to even try to make profits in real estate.
Although it seems the OP bought it with cash** and the second buyer was trying to get an FHA mortgage.
I'm wondering if there had been "conspiracies" of some sort where one person bought with a regular mortage and sold on a pre-arranged deal to another who got an FHA mortgage, and that was defeating one of the goals of FHA. Perhaps the resale price in these cases was inflated, although I thought a required appraisal would prevent even an FHA mortgage for more than the house was worth (minus foreclosure costs.) Whatever the reason, it's not likely to be a secret, and many real estage agents, and almost all real estate lawyers would know the reason.
**although he said he had to pay a mortgage over the winter, but I guess he means cash he got by mortgaging the house, and used the term to mean he didn't get an FHA mortgage, which is also a mortgage, and pretty much like any other mortgage. So I"m not sure what the OP meant by cash.Both of these would be fine, so that's why I think the rule exists to prevent free enterprise when it's not working as the FHA enactors inteneded. Maybe in the way I suggested.
What if the tenants don't buy, but also don't move out? Then you've got a very annoying situation on your hands.
I've heard of similar things happening when a buyer lets the seller stay after closing, because the seller's new house won't be ready yet, and then the seller's new house falls through, and the seller doesn't move out.
If you are a buyer, it's a very good idea to not close until the house is empty, and if you are a seller, it's a very good idea to not let the buyer take position until after closing. Anything else is asking for trouble.
Amen, amen, and amen. We're still trying to get out some renters who should have been gone January first. You would think you just go kick them out.
Nooooooooo. There's writs to be writ. Processes to be served. Legal action to be taken. Chiggers are easier to get rid of.
Steve
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