Home Buying in Granada Hills>Question Details

Gerry, Home Buyer in Northridge, CA

Is there a law that regulates real estate companies from snatching up foreclosures and reselling for more?

Asked by Gerry, Northridge, CA Tue Jun 23, 2009

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Shel-lee Davis’ answer
Gerry:

Not sure exactly what you are asking, so if you can be more specific, that might help with the answers you receive. And, if you are really asking a legal question, an attorney would be the proper source, not a website populated by buyers, seller, and real estate professionals.

That being said, if you are talking about several investment companies in the LA area that pick up multiple properties from the banks, rehab them and then re-sell them, then to the best of my knowledge, no there is not a law against this. Do you believe there should be? What are they doing that you believe is illegal?

This is how it looks to me. The bank or asset management company sells a group of 10 - 100 properties to a single buyer. These properties usually would not qualify for FHA loans and therefore are not available to most of today's homebuyers. The investor gets some pretty bad stuff mixed in with some stuff that maybe only needs cosmetic fixing. The bank gets rid of a big batch of inventory. The investors puts their crew of rehabbers on the job and in 7 - 10 days they turn a dirty, damaged, scuzzy home into one of the nicest looking homes on the block, with fresh paint, double paned windows, new landscaping and, don't forget, granite countertops in the kitchen. Yes, they often just clean it up and give it curb appeal, but aren't they doing a service to the community? Now, the neighbors have a nice house in their neighborhood, a first time homebuyer can just "move in" without having to do a bunch of repairs, painting, carpeting, etc., property values are propped up, and some local handymen and craftmen just got paid for 7 to 10 days of work. If that sounds like it should be illegal, maybe I am not understanding your question. This sounds like a win-win-win-win scenario to me. Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
http://shel-lee.listingbook.com
1 vote Thank Flag Link Tue Jun 23, 2009
Realtors can buy foreclosures as long as they disclose to everyone in the ' Offer toPurchase', that they are Realtors. They are bound by all laws and regulations that prevent flipping homes and inflating or deflating home values or mortgage fraud. There may be requirements on the lenght of time a home must be held by the new owner before re-selling. Check with your state laws. You could probably call the National Association of Realtors for more information. Wanda Couch Keller Williams Realty Atlanta Partners
0 votes Thank Flag Link Wed Aug 25, 2010
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