However, if you have been looking then you know finding and securing a property can be extremely frustrating. Not only is inventory low in North County, but many sellers are turning down higher FHA offers and accepting inferior all cash or conventional financing offers.

Also, FHA financing requires the property to be in good condition. This rules out foreclosures that have been stripped or properties with any missing appliances. Investors are also purchasing low priced homes in poor condition and then fixing them up and putting them back on the market. This is commonly known as “flipping” a property.

These properties are also not options for FHA buyers because FHA financing requires that the property not have transferred ownership within the last 90 days. This is known as the FHA anti-90 day flip rule. All these factors combined make for a frustrating first time home buyer market.

Buyers stick with it because there is light at the end of the tunnel if you have an experienced agent who is on top of the new inventory.

Above is a picture of my very happy clients. They spent 6 months looking for their perfect first home. They had made two previous offers on other properties, but lost out to competing all cash offers. In their search they learned a lot about the different areas they were interested in and decided that for a little bit more money a month they could get a lot more house. It was a learning process and in the end they secured a wonderful detached home in Shadowridge, Vista. They couldn’t be more excited with the end result and the night after escrow closed they got engaged in their new home!

So, if you are a first time home buyer experiencing some heart ache, don’t give up! As long as you have good representation and a little patience you too will find your home sweet home in time to take advantage of the tax credit and today’s great financing opportunities.

This may affect the condition of the house at close of escrow. With a traditional sale (not a short sale or foreclosure) you can expect a house to be in the same condition it was in when you wrote your offer. With a short sale, however, you have to be prepared that the home will be in much worse condition. Per the purchase contract everything that is attached to the property conveys in the sale including window coverings, ceiling fans, fixtures, built in speakers, etc. These items are not guaranteed to be left by the seller when purchasing a short sale. 

Also, the seller may turn off all utilities to the property prior to closing. As a result the landscape may be dead and you may be required to turn on utilities in your name to complete the required appraisal for your loan.

In the end most short sales can be bought at a great price, but be prepared to do some work before it becomes the original house you fell in love with months before.

Buyer: So I’m seeing a new home (detached and attached) which would qualify condition wise, complex approved for FHA sales and so on. Why is the listing agent saying no FHA offers for at least 90 days?

Check out the Housing and Urban Development site for all the details.

But basically it’s likely a “flipper” or investor purchased home on the “court steps” at a deep, “cash-only” discount… then cleaned up and re-listed the property. FHA will not provide a loan on this home until it has been owned for at least 90 days. Conventional, VA and other loans don’t have this requirement. But it sure makes it very difficult for the large FHA buyer pool to purchase these homes.

** FHA buyer suggestions: When limited to the FHA loan and wanting to purchase a home… Search market time in the MLS in the 30-60+ days and/or cross reference with the recorded sale date in tax records. Keep in mind an escrow can take 30-60 days. So if you work a deal before you’ll want to work with the lender/agent while under-contract so they hold off on appraisal or paperwork submittal to FHA till after the 90 day time. Large initial 3% (based on sale price) deposits will help the seller feel comfortable about a longer escrow and may give you the opportunity to beat out another offer **

These “flipper” or “court steps sales” are dominating the resale market currently. Look for additional updates shortly on additional steps, concerns, and valuations of these homes.

For additional information contact reo@lundteam.com or call 760.438.0800. Thanks.

Example: 711 Greyfield Court, Fallbrook 92028 – MLS 090066549

Bank Owned. Listed over 2 weeks ago below all other comps in area. Premium location at end of cul-de-sac, very clean interior, 16,000+ sq. ft. lot. Built in 2001. Almost 2,700 sq. ft. Gated community of Peppertree Park.

Opportunity to make an offer here without multiple bids!! Hurry…

Call Lund Team at 760.438.0800 or email reo@lundteam.com for additional information.

Front of Property - Greyfield

Conduct a detailed physical inspection before you buy your investment. An experienced, licensed physical inspector is recommended.   It will be around $300.00, but varies dependent on inspector and type of property.  Even if you think you know a lot about property, a competent inspector knows more.  And will save your assets.   In North San Diego call David Kates:  www.4thehomeinspector.com 

Pressed for time:

Stick your head up in the attic access with a flashlight and look for exposed piping.  If you see any bluish-green stains on the pipes, away from the joints, this could be evidence of a pinhole leak. 

Guesstimate the age of the pipes.  If you estimate the pipes to be 25 years or older, investigate further and plan for an eventual leak. 

Find any evidence of previous leaks.  Become a Sherlock Holmes and look hard for any evidence within the property of drywall repair or re-painting.  If the pipes run overhead and there is a discolored patch on the ceiling; something went down.  But don’t overreact….it could also be a roof leak.  Yikes.

Are the pipes Copper or polybutylene?  Polybutylene piping, a type of plastic piping or copper pipes with plastic fittings, can still be found in homes across San Diego.  A home built between 1978 and 1995 could have P.B piping.  Looking in the attic at exposed piping and checkout the fittings/joints where the two pipes meet can tell you if you have P.B.  If you do, replace your piping.

Just to give you an idea: Having the piping replaced in a home can cost between $7,500 and $8,500 for a 2,000 sq.ft home.

A good sign

Go into the garage and walk around outside the property.  If you see pipes running on the outside of the drywall, this is evidence of a “re-plumb”.  The pipes have been replaced.  That means someone’s old pipes are now your new pipes; thats good news.  But look for any evidence of previous water damage or mold intrusion.  Almost no homeowner will preventatively replace their pipes.   A leak prompts most homeowners to replace their piping.