Property Flipping Re-Energized?

Back during the days of the boom in the Tallahassee real estate market, we had people contract to buy a home in Tallahassee with no intent of owning it for any real period of time. These investors are known as “real estate speculators” and they have no intention of being in the market for a long time. They write a contract on a property, close on it, and then find buyers to whom they “flip” the property for a quick profit. Some are even able to sell the property before they even have to close on it for themselves.

Great booming real estate markets always create opportunities for flipping homes, but what happens is that this creates a “feeding frenzy” in the market, causing prices to shoot up faster than would happen without the speculators.

Well, five-years ago, lenders decided that it was too risky being involved in the end-deal of these flips. The Federal Housing Administration established a rule to deter these flipping speculators which imposed a 90-day waiting period before a home could be financed with a government-backed loan. This meant that flippers now had to own the home for more than 90 days before the could realistically sell it, thus increasing their risk of loss.

So why does this matter today? Because the White House just put a temporary freeze on this rule in order to help in the cause of selling foreclosed properties. “A glut of foreclosed and abandoned homes harms neighborhoods, frustrates home-buyers and delays a community’s recovery,” FHA commissioner Brian Montgomery said in a prepared statement.

I believe this is good news for a real estate market in need of good news. This will allow for an easier consumption process for distressed homes in the Tallahassee real estate market and will enable a quicker recovery of the market.


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Joe Manausa is a real estate investor and the Broker and Co-Owner of CENTURY 21 Manausa and Associates. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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17 June 2008
Joe Manausa
Century 21
Last modified: June 17, 2008
About Joe Manausa

Joe Manausa, MBA is a 22+ year veteran of real estate brokerage in the State of Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

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