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Review Invoices, Receipts and Warranties

The practice of investors flipping homes in San Diego can still be found in various areas of San Diego County.  Typically, these areas were the hardest hit by the residential real estate downturn.  Basically, flipping a home means an investor has purchased the property at a low price and is selling it at a higher price.  Please know that’s the simple definition as the process can be quite complex depending on the property and market conditions.  If you are currently looking to buy a home in San Diego County, you may come across an opportunity to purchase a flipped home.  These can be great as they are usually competitively priced traditional sales where you can avoid some of the challenges of short sales and foreclosures.  We recommend doing the normal due diligence when it comes to inspecting and investigating a flip, such as a physical inspection.  One crucial item that can be overlooked is to request documentation from the seller detailing the work performed in rehabbing or updating the property prior to them listing it for sale.  Make sure to review and understand all receipts, invoices and warranties as part of the property investigation process.

Typically, an investor who wants to flip, will buy a property that needs upgrading.  The goal for them is to buy low, make the necessary improvements and sell at a price satisfying their profit margin.  It is important to know that the seller, in this case, is obligated to provide the buyer with documentation (receipts, invoices, warranties, etc.) for the improvements and/or repairs.  The seller in this type of sale is not TDS exempt.  TDS exempt means that they would not be required to provide the buyer Transfer Disclosure Statements.  California Civil Code requires these statements be provided by the seller to the buyer which gives information about the property.  Information includes the state of seller occupancy, appliances, defects, malfunctions, material facts, etc.  TDS exemption applies to sellers who obtained the property through involuntary deed such as a bank in a foreclosure or trustee sale and does not exempt an investor who is flipping.

For example, this documentation becomes extremely important to the buyer following a successful close of escrow.  There are instances when the previous work done fails.  Using the appropriate documentation, the new owner can go back to the licensed contractor and have the problem repaired.  In addition, a potential buyer may be able to discover if work was done by a licensed professional during escrow which may weigh on the decision of whether to purchase the home in the first place.  For questions on buying flipped homes, please contact us at 888-466-2855 and search for active homes in San Diego at www.NoBullAgent.com.

Mortgage Market Update

Information in this post is provided by Greg Wickstrand, Home Loan Consultant for HomeServices Lending.  He is a guest blogger who provides us information from a lender’s perspective.  For additional posts by Greg, please visit his BLOG.

What’s Ahead for Mortgage Rates this Week:  October 18, 2010
By:  Greg Wickstrand

Mortgage markets worsened last week in back-and-forth trading, pushing conforming mortgage rates higher on the week.

Despite the uptick, however, Freddie Mac reports that rates still managed to make new, all-time lows for the third week in a row. The benchmark 30-year fixed rate mortgage is now down 1.02% since April 2010.

The United States is experiencing a Refi Boom.

As compared to 6 months ago, a new, $200,000 home loan costs $124 less per month in principal + interest.

This week, monthly payments may fall some more. It all depends on data.

Early in the week, housing data takes center stage. The National Association of Home Builders releases its Housing Market Index this morning, and, Tuesday, the government prints September’s Housing Starts figures.  Both reports figure to influence the bond market.

Strong readings should lead mortgage rates higher; weak ones should lead them lower. Economists expect weakness.

That said, the biggest story of the week — and the one with the best chance of changing rates — could stem from the Federal Reserve.

Federal Reserve officials, including Chairman Ben Bernanke, have observed the recent U.S. economy and have openly discussed the use of “non-conventional means” to spur it forward. As the rhetoric increases, it’s widely believed that the Fed will act soon, and that the central bank’s plan will include new commitments to U.S. Treasury debt, and, possibly, to mortgage-backed bonds.

Speculation of the Fed’s next move has sparked mortgage bond demand which, in turn, has helped drive down mortgage rates. An official Fed announcement could push rates lower still.

For now, though, mortgage rates are as low as they’ve been in history. Rate shoppers have two choices. (1) Lock in a today’s low rates, or (2) Wait and hope that rates fall further. Ultimately, rates may fall, but once they start rising, they’ll likely rise quickly.

It’s a gamble you may not wish to take.  Read Greg’s original post

Look for future posts at www.NoBullAgent.com every Monday on issues to watch for in the mortgage market from local lenders in the San Diego area. When choosing a lender, we suggest you talk with a few to make sure you find a representative and company that works for you.  Having a strong relationship with your lender, especially in this market, can be crucial to a successful home buying experience.

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