Is buy/sell dead for now?

[Derek W.]

I wanted some other opinions on the state of rehab/retail investing. Some call it buy/sell, some call it “flipping†but specifically I mean purchasing a distressed property at a discount and rehabbing so it is in move-in-ready condition and reselling it to an end user for a profit. I am in Riverside County, California, an area hit especially hard by foreclosures. The problem recently has been getting the end buyer’s loan to appraise for the purchase price. Most of the sales in Riverside County are FHA buyers, so I understand that most of what I am talking about doesn’t apply to cash or conventional mortgages. The average hold time from purchase on my end to close by an end use buyer is 5-7 months. (FHA 90 day title seasoning anti-flipping rules, 30 day or less marketing, 60 day escrow is best case scenario right now.) In a market that is declining 4% a month, by the time we get to the end buyer’s appraisal even if we have multiple willing buyers to purchase at asking price, we can’t get the appraisal to comp because FHA underwriters are asking for additional comps above our asking price that are 45 days old or less and ¾ mile radius or less. We have tons of comps at purchase, but 7 months later are fighting all of the “as-is†low sales price. Is anyone having luck retailing in this market? Any tricks you have learned to help a brother out?