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“Flip” Rule Again – 20% Appreciation Is OK

We are addressing “flips” again because we get so many questions.

A “flip” is a property that was purchased by an investor that is getting resold in less than 90 days. Even if the transaction closes OUTSIDE of the 90 day window, a resale is still a “flip” as long as the contract is dated within the 90 day window.

We have several “flip”-tolerant lenders for both FHA and Conventional financing, so “flips” are not a problem.

The only minor issue is when the “appreciation” from the date of the investor’s purchase to the date of the resale is over 20%. In this case our lenders require two appraisals, but we have yet to have them NOT come in at value. Our lenders typically pay for the 2nd appraisal as well.

Note also that the 20% appreciation rule does not “net out” transaction costs (Realtors always ask me that). It is based simply on purchase price and resale price.

Call Jay Voorhees at (925) 855-4491

Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646