Burlington-Camden County NJ Real Estate

HUD Releases New Rules to Curb Flipping

Posted at 11:43 PM, Jun. 16, 2006

HUD Releases New Rules to Curb Flipping

The U.S. Department of Housing and Urban Development (HUD) published a final rule in the Federal Register on June 7, 2006 amending previous regulations regarding property flipping. According to the new rule, only the owner of record may sell properties that will be financed using mortgages insured by the Federal Housing Administration (FHA). Also, property sold within 90 days of acquisition will not be eligible for FHA-insured financing.

There are exemptions from the rule, which include sales of properties by HUD, Fannie Mae and Freddie Mac, state and local government agencies, HUD-approved nonprofits, and sales of properties within presidentially declared disaster areas. The rule takes effect for mortgages endorsed for insurance on or after July 7, 2006. Read the mortgagee letter available through the HUD web site at http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi? d=MLET&s1=06-$[no] &op1=AND&SECT1=TXTHLB&SECT5=MLET&u=./ hudclips.cgi&p=1&r=3&f=G for more information.

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Beware of falling in love with remodeled home

Posted at 4:49 AM, Jun. 9, 2006

Inman News often has some good tips. This one deserves repeating. Just pay attention to the details and you will be much happier with your home purchase. Bart - HJTeam

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Beware of falling in love with remodeled home
Some telltale signs of poor workmanship

Friday, June 09, 2006
By Paul Bianchina Inman News

Are you falling in love with a home that was just remodeled, but want to make sure it was done right before you consider buying it? Remodeling that is all glitz with no substance can be an invitation to some real headaches down the road, so here are a few major things to pay attention to while you're shopping. If--after making as close an inspection as you feel confident doing on your own--you still love the house but still have some doubts, consider hiring a home inspector for a complete professional evaluation before you sign on the dotted line.

Check those wide-open spaces: Open floor plans are a desirable feature in today's homes, but creating them during a remodeling project is more involved then just removing a wall or two. If you are looking at a home--especially an older one--that shows any signs of walls, window and door headers, or other structural components that have been moved or eliminated, you need to look very closely at how it was done. The removal of bearing walls without adequate support is a real recipe for disaster--unfortunately, unless you see an obvious sag in a floor, wall or ceiling, it's very difficult for the non-professional to determine what structural work was done, so just catalog this in your notes to pass on to the inspector.

Got power? A common problem with remodeling that's been done by inexperienced people is overloaded electrical circuits. For example, you may be looking at a kitchen with lots of gleaming appliances and plenty of electrical outlets, but all that electrical usage is split up between only one or two circuits where there should be two or three times that many. One easy test is to turn on a bunch of appliances and other electrical devices in the kitchen and see if the circuits trip. You also want to examine the electrical panel, and see how many circuits have been dedicated to the kitchen, or to any other room you have concerns about. A new remodeling should also show signs of new circuit breakers in the panel, and any older home that's been renovated should certainly not still be on an undersized 100-amp panel or, worse yet, on an original fuse box.

Feeling grounded: Older homes that were built before the electrical codes required grounded outlets may have been remodeled with grounded (three-prong) outlets installed but not properly grounded. A simple plug-in tester, available from any home center or hardware store for under $10, will show you instantly if the outlets are grounded correctly, and will give you a pretty strong indicator of how knowledgeable--and possibly how honest--the remodeler was.

Look for the signs: A simple examination of a home can reveal a lot by simply paying attention to telltale signs.

1. Are there moldings that seem out of place--too large, or installed in unusual places--that might be covering up structural defects, inadequate joints, water stains, or other things a seller would prefer you not notice?

2. That shiny new coat of paint on interior or exterior trim may look nice, but does the surface underneath feel spongy? The paint could be covering up rotted wood or other problems.

3. Is that wallpaper bulging? Heavy wallpaper is an old trick for covering over bad plaster or poorly repaired drywall, so run your hand over wall surfaces to see how smooth they feel.

4. When you look in the attic, basement, or crawlspace, do you notice a musty smell? All the remodeling in the world won't cover up the odor of moisture and mold problems.

5. Are roof shingles curling, cracked, or missing a lot of granules? A fresh coat of paint on the inside ceilings may be covering up water damage from a bad roof, so pay attention to what's up there. The same goes for the condition of the siding.

6. Does it match, or can you see it a mile away? It may seem like an odd thing to consider, but even a good remodeling that doesn't match the rest of the home can be an indicator of a contractor or homeowner who wasn't experienced enough to do a professional job, and that can sometimes be an indicator of problems that have been covered up in other areas.

7. Were the required permits obtained? With any major remodeling that involves changes to a home's structure, plumbing system, electrical wiring, or other substantial alterations, a building permit is typically required. All it takes is a call to the city or county building department where the home is located to find out if permits were required for the work, if they were obtained, and whether all the necessary inspections were completed.

8. Watch out for the "flippers." Sometimes a key to poor remodeling can also show up in what's happening in your town. Has it suddenly become a hot area to move to, with lots of inexperienced "flippers" purchasing older homes to fix up for resale? There's certainly nothing wrong with flipping homes for a profit, but when it's all about the money, it's too tempting to cut corners in areas that won't be seen.

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