Short Sales, Flips, Pre Foreclosures - Is This the End?

It’s just a matter of time (and not much time, at that) before the Uniform Closing Instructions (UCI) become widely adopted and transform real estate investing as we know it.

The bad news is, the introduction of the UCI into the real estate scene will hurt many investors because they either won’t know about the UCI or they won’t be ready or willing to adjust the way they structure their deals.

However, those investors who are prepared can still enjoy a lucrative career as a real estate investor, if they are willing to work within the new regulations.

Unfortunately, working within the new regulations means restricting your investment practices. You may need to steer clear of short sales, flips, double closings or any other properties that have not been seasoned for 12 – 24 months. Title companies will now be required to report any of “red flags” under the guidelines of the new regulations.

Once the UCI are adopted by the industry, these creative forms of real estate investing, will, as I said, be restricted.

I know what you’re thinking. It’ll never happen. Not all the Title Companies will enforce the UCI and investors will still be able to “conduct business as usual.”

Listen, you’re not the only one thinking there’s nothing to worry about. I thought that too until I had actual conversations with some of the key members on the committee who wrote the new regulations.

The committee members who crafted the UCI are dead serious about standardizing these regulations nationally.

You see, the members on this committee never want to see another subprime crisis again. They decided to do something about it before the government did.

As you know, the government stepped in and passed the new Housing Bill and other initiatives which will help a lot of the homeowners and banks deal with the foreclosure crisis, as well as a big time bail-out for some of our fundamental financial institutions.

The committee, however, doesn’t want the government getting involved with the closing instructions.

What I’m saying is “non-traditional” deals (with traditional financing) will no longer get past the Title Company because these types of real estate deals do not comply with the UCI. Remember, the new regulations require the Title Company to report any deals which have not been “seasoned” (meaning, properties which have not been held for 12 – 24 months).

In order to avoid the government getting involved, the new UCI needs to be taken seriously.

Are Traditional Investment Strategies the Answer?

One way to do business within the new regulations is to focus on “traditional investment strategies” such as Control and Assign; Buy and Sell; Buy, Improve and Sell; and more long-term strategies such as Lease Option; Buy and Hold; and Buy, Improve and Hold.

However, while these traditional investment strategies are solid, feasible ways of doing business, not everyone is in the financial position to do deals which require large amounts of cash upfront or require you to buy and hold properties for 12 – 24 months before you can sell and make a profit (per the new UCI).

Short Sales, Flips, Pre Foreclosures - Is This the End?