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From John Grant, Market Adviser...
By most accounts, the housing market is lurching toward a recovery. The evidence most often cited by experts and the media is the rise in home prices, especially in markets ravaged by the foreclosure crisis. Their facts are correct, home prices are ticking upward, but their conclusion that the uptick corresponds to a reality-based housing recovery may be optimistic.
The rise in home prices directly corresponds to new valuation methodology implemented several months ago by Fannie and Freddie to obtain a “fair” price for bank-owned or real estate owned (REO) properties. Previous methodology valued foreclosed homes as a percentage of broker-price opinion (BPO). In other words, a broker would submit an estimate of the value of a foreclosed property, and distressed buyers would usually pay between 80-85 percent to take the property off the hands of Fannie and Freddie.
New methodologies put in place by Fannie and Freddie have scrapped the…
John Grant
is the president of the Distressed Property Coalition, a private advocacy effort formed by the top leaders in the residential real estate industry, and dedicated to private market solutions, smaller government, and protecting taxpayers. DPC exists because investors deserve an easier path to buy and sell houses. Investors deserve to shape policies that govern them, not to be subjected to them. Investors deserve better information on current laws and policies. Investors deserve a safe environment to learn more about the industry. DPC is dedicated to providing these services to the residential real estate community. Their content and track record of success in Washington are unprecedented for this industry.
To received Mr. Grant’s policy briefings and newsletter, please visit www.distressedpropertycoalition.com