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Beating the “Flip” Dead Horse Again

A “Flip” is a property that was purchased by the current seller within the last 90 days. Many, if not most, lenders will not lend against “Flips”.

We still get so many questions regarding Flips that we are addressing them again today.

1. Bank REOs do not count. If a bank or a mortgage trustee takes title to property via a foreclosure and re-sells within 90 days, that is not a Flip.

2. To avoid “Flip” restrictions, a buyer must not resell the property within 90 days of the day he or she (or “it”, if the seller is a corporation or partnership) took title. This means that ALL dates on the contract must be past 90 days. Escrow must be opened past 90 days. And all other events relating to the purchase must be past 90 days (EMD deposit, Appraisal, Etc.)

3. Several Lenders allow both FHA and Conventional financing for Flips.

4. Over 20% Appreciation: Only a select few lender allow appreciation (from seller’s original purchase price to current pending price) of over 20%. If appreciation is over 20%, two appraisals are required, and the lender pays for the 2nd appraisal.

5. Under 20% Appreciation: If appreciation is under 20%, only one appraisal is required, but that appraisal will receive extra scrutiny.

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646