Some property investors would like to buy houses at good location but in poor condition, to renovate and largely mark up and reap a huge profit from it. How could an agent persuades a buyer to buy a property which is owned by the vendor for a very short period of time and is being re-sold at a much higher price?

This question reminds me of Tin Men. When they would stand outside the lady's house and call it the before house.

I think expressing the fact that the house was in less than perfect condition prior to the rehab should provide your answer. Guys like me can't do the repairs themselves so they (me) have to pay for someone's sweat equity.

Really it depends on the market area, & the work being completed for a "huge profit" to be earned.

One thing I'd recomend is copying reciepts, inspection reports, permits, and actual work done & by whom, & have it all available to potential purchasers. Also, is you've got area stats for simialr rehabbed homes both actives & solds, letting purchasers know how you & the seller arrived @ your price.

It's not so much a matter of persuading, as it is good marketing techniques.

Why would it be any of the buyer's business what the seller paid for the property?

Buyer's concerns are what are they going to pay and what kind of financing can they qualify for.

One of my investor clients just closed on a condo he only held for 3 weeks and made a potful of money. The buyer was delighted because she got a great condo at the market price.

She was the first person that looked at it and made a full price offer on the spot.

Not sure about where you are in TN, Jim, but, it can be a very big deal indeed. With all the mortgage fraud parts of Ohio have experienced, it may not so much be the buyer, as the appraiser & the lender one would have to passify before giving the OK on a purchase.

On a different note, but kinda related, isn't it HUD that has in their contract that if it's an investor purchase they have to wait at least 90 days for resale?

I'm in east Tennessee, in Knoxville.

Of course the house would have to appraise but other than that, what a buyer/investor paid for a property and what they ultimately sell it for is not relevant.

I believe you can't sell a property with a new FHA insured loan withing 90 days of the last purchase.

Can't find it on the HUD website, but I know I've read that investor resale clause someplace. Maybe on here?

It's aboslutely relovant what someone paid for a house less than 6 months prior, and wants to resell for a massive proffit. I've seen many, that get bought as rehab for 20 or 30K, almost no work is done, and then some investor resells to an unsuspecting buyer for 80K, and little work has been completed prior to the resale. Then the buyers are scripming, not only to pay their mortgage, but to do all the repairs that were never done, or completed in such a slip-shod manner, they have to be redone.

How they get it to appraise & get funded for the mortgage is easy. The investors, appraisers, and lenders are in it together. Sounds conspiracy-ish, I know, but there's a huge federal investigation going on both in Cleveland & Akron, and I belive in Indiana someplace, right now about this same thing.

I think I work with a better group of investors than the ones you describe. I would not participate in a practice like that.

On the condo we just sold the guy painted, put in new carpet, new hardwood, new appliances, new fixtures in 3 bathrooms, and generally put it in top shape.

I believe he bought it for below market value because of it's condition and the fact it was a foreclosure and then improved the condition to bring the value up to current market value.

What he paid for it had nothing to do with what we sold it for. Like I said, the buyer was delighted, it did not sell for more than comparable units, and everyone walked away happy.

I wouldn't work with people like that either, and would be the first to report it if I felt something shady was going on.

From what I've heard from some agents in my area that are trying help some of these buyers get out of trouble, is that when they bought, mostly they didn't use an agent, and the investor usually didn't use one to sell, either. Although, lots of them had been listed as REOs when the investors made their purchases.

The only thing that matters with Value is what the actual market Value is at the time of contract and sale.

What its value was last week or a few months ago is irrelevant. What it was previously purchased for is irrelevant to anyone except the seller.

While some lenders do have seasoning requirements, they are actually ineffective in reducing mortgage fraud and only provide inconveniences to reputable buyers and sellers.

When ever value is added, and can be shown by reputable 3rd party valuations, then that is the market value... it is that simple, and with out regard to who, when and for how much it was last purchased.

The real problem attempted to be targeted by the seasoning issues are the dis reputable mortgage companies/ appraisers/ and sellers. These people should be the targets and not place some arbitrary time frame on sale dates.. it is silly and ineffective.

From a financing perspective, the price at which the property was last purchased matters a great deal. It does not just effect the seller. It effects every buyer who hopes to purchase the property, purchases an appraisal and/or inspection, and is then denied financing because the banks refuse to believe that a property could appreciate so quickly in the current market. Few banks will swallow such drastic short-term appreciation today. RealtyCheck is 100% correct that this bank practice is inconvenient and ineffective in handling the root of the issue. But after losing two or three buyers due to lack of financing, one may begin to feel that - silly or not - such properties are very tough to sell.

My $.02, respectfully

The KEY is to document with pictures the condition of the proprety when it was bought and the repairs that were made to bring it up to it's current value.

Fha's seasoning requirements try to deter flipping but it doesn't help in the least,it makes properties that honest investors are actually repairing harder to sell with borrowers who want fha financing and make run down properties stay on the market longer and blights neighborhoods,increases crime,and keeps values down.

There should be no reason an actual rehab shouldn't be funded,the property was bought below value in as-is condition and is now repaired and at market value for the are for resale.

If they are worried about fraud and collussion with the appraiser,agents,investors etc. then spend and extra 100 to 200 and have additional interior bpo's performed and if they are adversely different from the appraisal red flag.

I have told many lenders that have ordered bpo's and called me back that there is no way I can justify that kind of value for that property and that they would be making a mistake making a loan over what the subject is valued at.