In the 1970s in greater metropolitan Los Angeles when I was the owner of a real estate brokerage and management company, Prager Property Management, I acquired my early experience as a HUD Property Disposition Broker,  handling HUD foreclosed ("REO") properties. Then I learned more when I joined a team of private entrepreneurs who were buying, fixing, and selling distressed properties. Frankly, we were like a well-oiled machine and we made a bundle!

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Having moved to Colorado, I retired for about 10 years. I formed a non-profit charity,      Global Children’s Fund, aka WorldFriendshipPlace.  I donated $1/2 million to it and worked for it for essentially free from 1998 to 2006. You may ask, why I am back to listing and selling other people’s properties? For one thing, today that is where the money, challenge, fun, and an opportunity to contribute my skills is.  The money part is because there are new rules.

 

This is where I am needed.  I can show people how to get a really good deal for the place they want to live in  or invest in. --How to get great financing practically nobody seems to know about in this current economic climate. And I can show investors how to pick up what will turn out to be the best investment they will probably make in their lives if they do so before the rules change completely. Insiders tell me that guidelines will eventually eliminate all non-owner occupant borrowing. Then it will be too late for investors. But right now people can get great homes to live in or to rent to others, or to flip. And I can show them how.

            So I started something REALLY DIFFERENT! Now I trademarked Howard Prager's Home Selling System(TM)!What makes it so different from what every other broker does?

When I am about to list a property instead of waiting for a buyer to make an offer and eventually be required by the lender to get an appraisal, I hire the appraisal (or in the case of a HUD 203(k) what HUD calls a Consultant. I do this at my expense and risk that the seller won't list with me. Either way the appraiser or consultant writes up a "punch list" of the things that have to be done to meet the requirements of either Fannie Mae or FHA, "good condition property" loan assuming that the property needs work. Most distressed properties need work. It is usually why they are distressed.

 

I get licensed contractors to bid on the work that needs to be done. This is still before I have taken the listing. Once I have what is a probable low budget to put the property into shape to meet the appraisal conditions, I can work backwards to help determine the listing price. Because I will only take listings from serious sellers who want to sell now, they must sell at a discount from what would be the cost of the property plus the cost of fix up to reach the appraised value that the property would come in at. The only differences are I am doing it during when it should be done. In this market, that's when we are pricing the listing, so the listing is realistically priced. If it isn't it will be forced down by the eventual lender's appraisal unless there is a rich over exuberant buyer (in a seller's dreams!).  I'm doing it with a lender's appraiser (for example the FHA consultant) who will be the lender I will recommend that the seller insist the buyer use since the lender p-e-r-f-o-r-m-s. Also there will be a predictable outcome for the appraisal, since its done or just needs to be reconfirmed. (In the case of FHA a second appraiser must be used but the second and first appraiser are allowed to communicate and would only disagree in rare as blue-moon situations).

 

I have already pre-arranged 120% zero down FNMA and 120%  3% down FHA financing, so before my sellers consider a buyer's offer seriously and before I consider a buyer seriously. I want them to sit down with the appropriate lender and become totally pre-accepted for the loan amount of the final after-repair value and if there is the down payment, prove to the lender that it is available. The lender that requires zero down (a" portfolio lender" can follow its own rules and does not ask for the 20% down you would otherwise expect) requires FICO scores in the 720 or above range, That lender does a rate and term refinance after the portfolio loan, so no down payment is ever required in order to qualify for the Fannie Mae competitive loan. The 3% down lender (FHA) program will even accept buyers who are in Chapter 13 for 1 year or who have cleared Chapter 7 bankruptcy for 2 years. Obviously the credit requirements are lenient.

 

Now what we have is a property listed for a controlled amount that will come in for a controlled amount below the lender's appraisal after repairs. The buyer gets to move in with some built-in equity! The seller lists for a rational price that meets the current market, but is attractive enough to lure a wise and thrifty buyer.

 

The FHA program can even lend an amount to cover the buyer's rental expense while waiting for the property to be prepared.  Both programs require work to start within 30 days and to be completed within 90 days.  The seller gets paid immediately when the seller deeds the property and does not wait for the repairs to be done.  If the seller occupies the property the seller has to oblige several contractors and inspectors coming onto the property before the settlement date to calculate their bids or establish the punch list.