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FHA Real Estate Appraiser

5 things to keep in mind about FHA’s 90-day flipping rule in 2015

January 8, 2015 By Ryan Lundquist 36 Comments

The FHA flipping rule has changed this year. Since 2010 investors were able to buy a home, rehab it, and then re-sell the home to an FHA buyer as soon as they wished. But now in 2015 FHA has re-instituted their traditional 90-day rule so investors need to wait at least 90 days before selling their properties to an FHA buyer.

fha anti-flipping rule in 2015 - by sacramento appraisal blog

Is this a big deal or not for the housing market? I have 5 points below to consider and maybe share with clients when they ask. I’d love to hear your take too.

5 things to consider about FHA’s anti-flipping rule for 2015

1) An Inconvenience for Investors: This 90-day rule will be an inconvenience for investors since it limits the pool of existing buyers for their product. Some investors who are flipping at price ranges prime for FHA financing will definitely feel the impact of this rule.

2) Missed Opportunities: Some would-be FHA buyers will miss out on properties since investors will be more prone to accept a conventional buyer instead of waiting 90 days for FHA. In Sacramento, FHA financing has a higher volume at the lower end of the market under $200,000, so buyers at the bottom end could actually be more burdened by the rule.

fha logo3) The Reality of Less Cash: We no longer have a foreclosure epidemic both locally and nationally, which means there are fewer houses being flipped. Thus a rule like this carries far less impact in today’s market compared to the beginning of 2010 when it was absolutely beneficial. For reference, when FHA first eased their 90-day rule in 2010, bank-owned sales represented about 40% of the entire market in Sacramento, but now they’re only 5% of all sales.

4) It’s taking Longer to Sell Anyway: Realistically since many investors are going to take 30 to 60 days to flip a property, and then have a property on the market for 30+ days, this means some homes will still easily qualify for FHA financing. Agents will simply say in MLS something to the effect of, “90 day flip rule expires on such and such date”. For context, in November it took an average of 45 days to sell a house in Sacramento County and 50 days to sell in the region (though flips often sell more quickly since they are more marketable).

5) Boosting Conventional Loan Products: Lastly, removing FHA as an option within 90 days of acquisition will help steer some buyers to use conventional financing. Like I said two days ago when talking about trends to watch this year, we can expect to see some more creative financing options emerge as the market softens (and also as buyers need a different option to buy a quick flip without FHA financing).

I hope this was helpful. It’s so important to keep our finger on the pulse of the market so we can serve clients and make informed real estate decisions.

Questions: Do you think the 90-day flipping rule is a big deal or not? Anything else you’d like to add? I’d love to hear your take in the comments.

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Filed Under: Market Trends Tagged With: 2015 FHA rule, FHA, FHA anti-flipping rule, FHA appraisers, FHA financing, FHA Real Estate Appraiser, Market Trends, new FHA rule, Sacramento Home Appraiser, Sacramento real estate trends

Does a property with a flat roof require a roof inspection for an FHA loan?

April 5, 2013 By Ryan Lundquist Leave a Comment

It depends. A roof really only requires an inspection during an FHA loan if the appraiser or underwriter calls for an inspection. This goes for both flat and pitch roofs. Let’s read a bit more below.

flat roof inspection for an fha loan - by Sacramento Appraisal Blog

Straight from HUD on whether an appraiser will automatically require a roof inspection on a flat roof (Mortgagee Letter 05-48):

FHA-photo-by-Ryan-LundquistFHA no longer mandates automatic inspections for flat or unobservable roofs. In the appraisal report the appraiser will note any evidence of deterioration of roofing materials (missing tiles, shingles, flashing). Deteriorated roofing materials include those that are worn, cupped, or curled. If the roof is not observable, the appraiser will look for and include in the appraisal report any telltale signs of roof problems on the interior, such as damage or water stains to the ceiling area of a room or closet. The appraiser must note in the appraisal report that he/she could not adequately observe the entire roof area (state which area(s) were unobservable). Based on the information reported by the appraiser, the lender’s underwriter will determine whether or not a roofing inspection is required.

Summary & Attics: All things considered, a flat roof on any portion of a house won’t necessarily trigger a roof inspection, but an inspection may be required if there are signs on the interior or exterior that point toward roof failure. Remember, a roof has to have at least two years of remaining economic life for an FHA loan. On a related note, the appraiser is required to do a “head and shoulders” inspection of the attic, but when the roof is flat and there is no attic, this requirement obviously doesn’t apply.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written, and definitely comment below if you’d like.

Anything you’d like to add or ask?

If you have any questions or Sacramento home appraisal or property tax appeal needs, let’s connect by phone 916-595-3735, email, Twitter, subscribe to posts by email (or RSS) or “like” my page on Facebook

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Filed Under: FHA Appraisal Articles, Resources Tagged With: FHA article library, FHA inspection, FHA minimum property standards, FHA Real Estate Appraiser, Home Appraiser, House Appraiser, HUD, HUD appraiser guidelines, MPS FHA, roof issues FHA loan, sacramento appraisers

A tale of two pools (and FHA loans)

February 14, 2012 By Ryan Lundquist Leave a Comment

Here are two examples of pools that didn’t make the cut for an FHA loan until repairs were made. The repairs helped show the pool’s equipment was working properly and eliminated a safety issue too. Moral of the story? If you have a pool that is not filled or has green water, make sure the water is clear and pool equipment is working as it should before the appraiser gets out there.

FHA pool issue solved

green pool and FHA financing

I hope this was helpful. Let me know if you have any questions. I’ve written quite a few FHA appraisal articles in case you wish to learn more about what to expect during the appraisal process in the Sacramento area.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

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Filed Under: FHA Appraisal Articles, Photos from the Field Tagged With: FHA Appraisal Articles, FHA loan issues, FHA Real Estate Appraiser, Home Appraiser in Sacramento, photo of covered pool, photo of green water in pool, pools and FHA financing, tarp on pool

Thou shall not leave paint chips on the ground

January 12, 2012 By Ryan Lundquist 2 Comments

If you know anything about FHA loans,  you know a defective paint surface is something that needs to be cured. If the exterior of a house has chipping, peeling or flaking paint, it can be a health and safety issue if the house was built before 1978 due to a potential for lead-base paint exposure. If you didn’t know, FHA has an exhilarating 51-page manual for how to properly cure a defective paint surface (PDF). This is just the type of ready you love to do, right?

Photo of defective paint surface for FHA - by Sacramento Appraiser

DO NOT LEAVE PAINT CHIPS ON THE GROUND: If you’re dealing with a defective paint surface, make sure you or your contractor scrape away any defective paint and then completely reseal the surface with new paint (or some sort of HUD-approved sealant). Moreover, DO NOT leave paint chips or any defective paint dust or residue on the soil. This might seem like a minor point, but you don’t want to have to deal with potential environmental consequences for lead-base paint touching the soil, right? The appraiser cannot verify the paint problem was taken care of if there are paint chips all over the place on the soil.

This is why I include something like the following in my lender reports:

The appraiser noted a defective paint surface on the southern portion of the house near the roofline. All this portion of defective paint should be properly scraped and there should be no bare wood after scraping. The surface should be repainted or sealed according to FHA standards. As always, there should be no paint chips or paint dust left on the soil when the issue is cured.

I’ve written quite a few FHA appraisal articles in case you’d like to know more. Let me know if you have any questions.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

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Filed Under: FHA Appraisal Articles Tagged With: chipping paint on FHA loan, chipping paint on soil, defective paint surface, FHA appraiser article, FHA Real Estate Appraiser, how to deal with defective paint surface, HUD manufal for defective paint, Sacramento Real Estate Appraiser

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