House Flippers Affected by Clayton County School Debacle

Anyone who is flipping houses in Clayton County, Georgia, is aware of the general problems with the housing market. While there are houses to rehab and the prices are reasonable, turning them over to sell is no longer on the fast track. Flippers are now competing with individual sellers, trying to bail for various reasons, and an increasing number of bank foreclosures.

One of the problems that stands to make things more difficult for local house flippers doesn't have anything to do with the national housing slump or the rash of foreclosures. It has to do with the fact that Clayton County Schools are slated to lose their accreditation September 1, 2008. (For more information on the accreditation problem, read my article, Ripple Effect Of Clayton County School Accreditation Loss, here at Associated Content.)

Potential buyers (unless they have been out of the country for months) are very aware of the school accreditation problem-especially those with children. While a single person, a young couple or a young family with very young children, might be willing to risk living in an area where schools are substandard, parents of school aged children are going to think long and hard about putting their children's education and future at risk.

There are problems for Clayton County house flippers that go beyond just convincing a family to buy. These problems can come in the form of acquiring money to purchase the flip or qualifying a buyer to purchase. Is it credit scores, tightened lending practices, gun-shy investors? Surprisingly, the answer is no to all of these. While they are all factors and can impact the purchase or sale, there is something more insidious adding to the flipper's woes. It is the appraisal.

In a recent conversation with a local appraiser, who appraises for VA and FHA loans, he was very forthcoming with his perspective on the Clayton County issues. He made mention of the fact that some investors and flippers have been "tweaking" the numbers in an effort to maximize profits and sometimes "shortcutting" improvements, which has made appraisers and the VA/FHA leery. Appraisers are looking closely at all things associated with flipped houses, including the original purchase price and receipts for repair materials and services. But, beyond all this, he said that the potential for the loss of school accreditation was a huge problem for appraisers. How does one gauge the value of a property situated in a neighborhood served by an unaccredited school? No one knows.

If it happens, this will be the first time in 40 years that a public school in the United States has lost accreditation. That being the case, it is unlikely anyone in the banking, lending, investing or appraising business has any basis for precedent. Serious questions have risen. Who is going to want to buy those houses? Will the property values hold or decline? Will people walk away from loans in an effort to advance their children's education? While Georgia lawmakers are attempting to address the potential loss of accreditation with the "school voucher" bill, will parents be willing or able to transport their children across county lines to attend school and will other counties be willing to absorb them?

If you are a house flipper or the investor of a house flipper in Clayton County, Georgia, even if you don't live in the county, you may want to become involved with the issue. After all, it has the potential to negatively impact your income and profits. Add your voice and resources to those of the parents and teachers calling for the current board to resign. Protect your livelihood and your investments.