For better or worse, property flippers gain acceptance in tough market
I've not always has the highest regard for property flippers. Especially in urban neighborhoods, they can wreak havoc during a rising market, rapidly reselling rundown homes at inflated prices.
But the federal government has decided that, at least for now, it can't live without one of the world's oldest entrepreneurial activities.
The Federal Housing Administration is suspending its anti-flipping rule for a second year, extending the waiver until the end of 2011. (Thanks to BostonCharles for the tip on this one.)
For flippers, this means they can sell homes they bought and renovated to buyers with FHA financing without having to wait the standard 90 days, or three months.
This clearly makes the flipping model more profitable, while opening up more foreclosures to the average buyer.
The FHA is spinning this as a big win for buyers.
To be honest, I have mixed feelings. A better, longer-term solution would be to strip away some of the huge hurdles the average buyer faces when trying to land a foreclosure.
That includes going up against property flippers armed with cash and being forced to gamble on the condition of a troubled home they haven't had the chance to fully assess.
Sure, the property flipper is performing a service here, but he or she is then selling back the home at a markup.
I can only think of my Natick fixer-upper. Every time I mention my renovations and additions I made to what was originally a pretty derelict home, I have some builder trying to convince me it would have been cheaper if he or she had bought it, torn it down, and built a new house for me.
Now I am sure that would have been a tidy profit for some cash-on-the-barrel contractor/property flipper, but that hardly sounds like it would have been a great deal for me.
But now we are talking about cutting out the middleman, and sorry, that sounds pretty Utopian for our bungling federal bureaucracy.
Given that, there are lots of foreclosed homes that need to be renovated and put into the hands of stable buyers.
And right now, property flippers, those guys everyone loves to hate, are probably the best bet to do it.
