They call this phenomena “Boomerang Buyers”. These are the families who lost their home to foreclosure following the housing crash are now re-emerging and looking to buy again. And well they should—if they can get the money. It's much cheaper to own than it is to rent (at least for now, before the presidential election messes up our tax regulations).
Many folks who lost a house, or short sold their homes will be eligible to buy a new home with FHA financing, in just three years..
Any one with a house for sale should have a burning interest in reaching out to these “boomerang” foreclosure buyers. For example, some builders and Realtors are offering fliers that detail mortgage eligibility rules for families who have undergone a foreclosure or bankruptcy. Essentially they are saying, “all is forgiven—if you want a house we'll figure a way”.
In a story from the The Wall Street Journal on this topic, they reported that in order to qualify for a mortgage backed by the Federal Housing Administration (FHA), families must wait three years or more to apply again following a foreclosure or short sale. Three years ago about 729,000 households were foreclosed on during the housing crash--meaning these folks are now eligible to apply for an FHA mortgage – up from 285,000 a year ago,
But just because “boomerang” families are allowed to apply again for financing for a home purchase doesn’t mean they’ll qualify for a loan. The rates are very low just now, but there's the matter of a down payment—think 20% for now. And these families will still have to show a strong credit score and meet stringent underwriting standards.
For those who remember the flipping TV shows that have run over the years on HGTV (for example), or who have purchased the “No Money Down” sales programs sold on late night TV, you might want to start looking around for an investment property. Flipping is back, even if no money down is tougher to work out than the TV guys said.
Many of the short sales over the past year or so were sold to folks who felt they could use the house for a year or two and then sell for a profit. With the prices strengthening and the inventory thinning out, the “flips” seem to come back on the market with a makeover—usually new kitchens and lots of fresh paint. Recently I showed a home in a tony neighborhood in Sarasota that was priced at $160,000. When I looked up the most recent sales for that street, that particular house had sold in January 2012 for $114,000. Today it has a new roof, granite counters, stainless appliances, a new “hardwood” floor, and lots of fresh paint.
My clients loved the interior, but didn't like that it had an old pool and no garage. In the old listing it had a carport but no dining room; now it has a dining room but no carport. It's probably worth the money and I expect it to be sold pretty quickly.Dane Hahn is a real estate professional serving Sarasota and Charlotte Counties. He can be reached at firstname.lastname@example.org or by phone at: 941-681-0312. See him at www.danesellsflorida.com www.danesellsflorida.com.