Sacramento Real Estate Views

To Flip or Not To Flip…..Is There A Question?

They May Have Eased The Flip Rule….but

I’ve got a client right now, a first time home buyer, and we’re in escrow on a home that’s perfect for him in Antelope. (Antelope is an area of north east Sacramento)  This home had been foreclosed on and then purchased by an investment group who then put the property right back on the market.

For those not familiar with real estate terms, this is called “flipping” a home.  You buy it at a cheaper price and sell it for what the market in the area of the home will bear.  This kind of transaction is an investors dream as the turn around can be quick and profits fair.

Until recently, there were knee jerk rules in place to “protect” buyers from unscrupulous investors making buying a home and attempting to flip it.  A buyer used to have to wait 90 before making a financed offer on a home that had been recently flipped.

The rule just changed about 30 days ago allowing financed buyers purchase “flipped” homes as soon as they come on the market rather than having to wait 90 before making an offer.

Do I Always Have To Be The First To Test The Waters?

Mortgage rules are in a constant state of flux these days, much more than usual which for the most part are only succeeding in making the process harder.

When buying a flipped home, the lender and title company have been asking for:

1) a second appraisal.

2) documentation from the seller regarding every improvement.

3) documentation regarding what was paid for the property.

4) the home inspection.

5) additional documentation from the buyer ensuring an arms length transaction. (arms length = buyer and seller don’t know each other)

It seems like with every rule change that comes down in the mortgage industry, I’m the first transaction that lender has seen.  We’re experiencing delays as the process isn’t seamless yet.  Although the 90 day restriction had been lifted by HUD, there were only two lenders that would take the file.

If you’re buying a home that has been recently flipped, make sure your mortgage broker is up to date with the new flipping rules, mine is and it’s going as smoothly as humanly possible.

Thanks for visiting!

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Tags: home for sale in sacramento

This entry was posted on Monday, March 8th, 2010 at 2:15 pm and is filed under Sacramento Mortgage Information. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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