Realty411 Magazine The Best of Realty411 - Learn from Our Past Issues | Page 56
Mears writes, “Investors have not
lost interest in purchasing and
flipping homes, In fact, now that
we are seeing home price
appreciation, they are more
interested than ever,” Sheldon
Detrick, CEO of Prudential
Detrick/Alliance Realty, which
covers Oklahoma City and Tulsa,
Okla., said in a RealtyTrac news
release, “The challenge for many
wouldbe flippers in our markets is
a shortage of available inventory to
flip.”
WHY ARE LEADS HARD
TO FIND?
There have been fundamental
changes in the market that have
decreased the amount of leads that
are available for investors. One of
the biggest changes is that it can be
difficult to get a mortgage to
purchase a property. After the
market drop of 2008, banks
changed their lending procedures
and limited new mortgages to only
those with the highest credit
ratings.
The ripple effect in the market
has been that people who own their
homes, or who have a current
mortgage, are staying put. They
don’t want to take a chance of not
being able to get a mortgage for a
new property. This has resulted in
fewer homes for sale on the market
in the majority of the United States.
Instead of moving, many home
owners are simply renovating their
own homes and adding needed
space with extra great rooms and
bedrooms.
Another reason that homes for
renovation can be difficult to find is
that the foreclosure crisis has taken
a surprising turn. Instead of banks
putting these homes on the market
and selling them quickly at a
discount, they are leaving their
REO (real estate owned) properties
on their books and expecting to
receive the current market value for
these homes despite the fact that
many have suffered damage and
vandalism. Kimberly Palmer writes
that even if you do find a promising
pricing structure, you may still have
issues with these homes, “The
cheap prices do come with potential
downsides: Some homes have liens
against them or mortgages
associated with them, which can be
inherited by their new owners.”
It can also be hard or impossible
going on for quite a while and
shows no signs of slowing down.
Trey Garrison of Housing Wire said
of the 2015 market, “As of March
31, nearly 71% of homes in the
market were stale, meaning they
had languished unsold for more
than a month,” according to the
latest report by real estate brokerage
Redfin.
New listings shot up 9.2% last
month, but the spring housing
bounce is so far nowhere near big
enough to satisfy demand.
Nationwide, the total number of
unsold homes rose 5.3% in March
to 2 million, but at the current pace
of sales, that supply would be
‘The shortage of leads has
been going on for quite a
while and shows no signs of
slowing down.’ insight.
to inspect such homes in advance of
their sale, which means there’s no
time to check if the basement is
flooded or if the air conditioning
still works.
These types of unknowns are
just what can take a renovation
project from profit to cost in just
moments. Being able to fully
evaluate a property is one of the
best practices of purchasing a home
for renovation.
With the difficulty in getting a
mortgage and the shortage of leads,
moving your business forward to
complete renovations can be a real
project.
The shortage of leads has been
56
exhausting in only 4.6 months,
according to the National
Association of REALTORS ® .
Normally, the supply of homes
on the market in most metropolitan
areas would be much longer than
just over four months. While it does
sound like there is elasticity in the
market, only having approximately
a fourmonth supply of homes just
isn’t enough. The result of not
having enough homes on the
market can not only make it hard to
find a home, but has resulted in
increased prices on the homes that
are available.
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