If you're in the market to buy a home, but keep getting out-bid by investors with cash, there is some encouraging news. Starting Monday, the Federal Housing Administration is changing a rule that may allow more people to get into foreclosed homes.
For years, the FHA would not allow buyers to get an FHA loan when a seller owned the house for less than 90 days. But the government dropped the rule in hopes of helping markets like Las Vegas that are overloaded with foreclosures.
Heidi Kasama with Prudential Americana Group Realtors works with investors who buy up foreclosures, clean them up and put them back on the market. It may sound great, but she says it creates another problem.
"It's been a tremendous challenge. I have agents in my office that are writing 10 to 20 offers for these people because they are constantly bid out if they do have a loan. You've got investors who pay cash, and we have appraisal issues now, so if an investors has cash, the lender doesn't have to worry about the appraisal now and they'll take the cash deal first," she said.
Experts say homebuyers who need a low-cost loan can't get into foreclosures because of investors. Then, after investors flip the homes, buyers are pushed out again because FHA wouldn't back the loans.
Real estate expert Mark Baker says half the homes listed in Las Vegas are vacant. He also says cash offers make up about 40-percent of the market and FHA loans about 32-percent.
The federal government hopes suspending it's rule will connect the two and speed up the sale of foreclosures. "I don't remember in my 12 plus years of doing this when it's ever been a buyers market and a seller's market -- both at the same time. Its just rare to see that, but now we're seeing that," he said.
The U.S. Department of Housing says the rule was created to protect buyers from homes quickly resold at inflated prices. Even though the rule has been lifted for the next year, there are some conditions the buyer and seller must meet.
