LENDERS HATE FLIPPED PROPERTIES
Yes, it is true. Your client may have purchased the deal of the century at an auction last week, slapped a coat of paint on the walls, replaced a few appliances and is now ready to make a hefty profit. Except….FHA will not allow any contracts written until the 91st day after the last deed was recorded. And after that wait period, if the profit is deemed excessive, two appraisals will be required. And if you are thinking, that’s okay because conventional, VA or USDA do not have “seasoning requirements.” Think again, because that’s so 2008. All banks now have guidelines for seasoning. So be very careful when accepting an offer on your client’s flipped property or taking your buyer to view a home before asking if the lending bank is okay with “unseasoned” properties. And keep in mind, that awesome deal has now become the most recent comp for the appraisal.
Thanks Diane!
