The Market for Flipping Homes is Back!

It almost feels like a decade ago when the Greater Seattle area experienced a strong market for flipping homes. There were so many people on the bandwagon that TONS of “experts” offered seminars on house flipping, promising to “teach” people how to make quick cash in the process. Well, the flipping market is back (although we have yet to see the “experts” arrive yet) and while you too could get into flipping homes, why not start with your own? Not only will you build equity for you and your family, you’ll gain experience from your first project before your venture out into the flipping world. (And who knows, maybe that first project will push you to build your own real estate portfolio through flipping or fixing and holding). 

What does this mean for buyers out there? If you are willing to put in some work on a home, it can mean increasing equity and setting you up for success in the future. My background means I’m able to assist buyers and sellers in determining whether they’ll reap financial benefits from the potential time, money, and work put into a home. For instance, if a seller is ready to put a home on the market that needs some work done, we carefully review the list of projects together and select the “must-do’s” (usually health and safety related) along with those that will bring a high return. When a buyer is looking at a home and decides there are projects they either want or need done, I analyze the surrounding market to determine current market value in addition to projected value (with the changes) so they can make an informed decision without overbuilding for the home or neighborhood.

So whether you own a home and want to increase equity with improvements or you’re a buyer not afraid of a home that needs a little “TLC,” the market for flipping homes is back. Just remember, it can pay to seek market-driven and professional advice. Not from the “experts” that are sure to return, but from someone who can offer personal service like moi!

Opening Pandora’s Box of Loans

Since 2008 (and in some cases 2007) we have witnessed the demise of banks and other lending institutions, and watched as the remains of a number of loan programs were scraped off the table. Many buyers found themselves in loans that were suddenly dead-ended: their program was eliminated and they were forced to either start over or accept the end of the road. Suddenly buyers felt the shrinking options in loans, not unlike walking into a Molly Moons to discover that chocolate and vanilla are the only ice cream flavors left. Thus lending criteria tightened as programs slipped into the darkness and the real estate market squeaked along. The motto for the mortgage reps was something like that of the little engine that could: "I think I can I think I can" yet sometimes...they could not. Now we are 6 to 7 years down the road and we're seeing Pandora's Box of Loans opening up!

In just the past couple of months I've heard of more new loan programs than I have in years and many sound, quite simply, too good to be true. In one case, a private investor will purchase a home for a would-be buyer who doesn't have strong enough credit to purchase on their own, and the buyer is able to rent the home from the investor for up to six years, then purchase it at the original purchase price AND reap the benefits of appreciation. Sounds like a dream right? Well it is just one of the many creative loan programs that I've heard from one of the main mortgage brokers I work with, Lori Richmond of Absolute Mortgage.

Lori’s company has been finding all sorts of private lenders and programs to help pretty much any buyer get into a home…and most importantly these loans are safe and don't run the risk of outrageous financial risk. So I asked Lori about her the market and some of her favorite programs, and she says that because many buyers are also sellers (and contingent offers don't fly these days) that she loves the bridge loan.

About the Bridge Loan: In today’s fast-paced, low-inventory real estate market, "move up" buyers face a unique challenge that first time homebuyers don’t have to worry about: how to buy their next home when they have one to sell. Most people don't want to face a reality in which selling a current home is followed by a few months of renting that finally results in the purchase of a new home. Thus if the mother of invention is necessity, there has never been a more necessary time for bridge loans than the present. Our bridge loan program (also known as a swing loan or gap financing) can be used when a move up buyer is waiting on the proceeds from the sale of their home that has not yet closed. When a buyer is caught between two closings, it provides the necessary cash to move forward with a purchase before the sale of a current home.                                                                                                                

I also spoke to another one of my favorite mortgage folks, Evon Phua who is with Wells Fargo, and he discussed some of the amazing programs they are offering as well. Her favorite is that they are offering loans up to $1,000,000 with only 10% down and NO PMI! She also mentioned that Wells Fargo is offering VERY low interest rates right now that can’t be beat!

Finally, there are some quirky new and old programs creeping out of Pandora’s Loan Box now such as new construction loans, down payment assistance loans, new non-conforming loans, which really cover the whole gamut!

 So how are buyers and sellers supposed to take in all these new options? Should we feel nervous about another market crash and bubble or shall we organize a flash mob performance to celebrate? If we keep in mind that the lending world is now highly regulated and that programs are heavily scrutinized before emerging from the box, and consider that lending ratios have tightened to prevent borrowers from over spending on their home, I'd say it is time to celebrate...let the Flash Mob commence!