What To Know About Financing Flipped Properties

Buying a Flipped Property – What to Know If the home you are buying is being flipped within 90 to 180 days since it was purchased and  has experienced an increase in value there are some things you need to know.

Photo by flattop341

Rules for Recently Flipped Properties

• An additional appraisal is required (at no cost to the borrower whatsoever) and must include an interior inspection of the property
  • When the borrower is purchasing a property that was purchased by the seller less than 6 months before the borrower signs the purchase contract, or
  • When there is a value increase (as represented by the new sales price) of 10% or more if the seller bought the home within the past 90 days, or
  • When there is a value increase (as represented by the new sales price) of 20% or more if the seller bought the home within the past 91-180 days
• Exemptions for this rule specifically:
  • If the property is in a rural area
  • When purchasing from a local, State or Federal Government Agency
  • When the seller acquired the title to the property through foreclosure, deed-in-lieu of foreclosure
  • When purchasing from a non-profit entity that as part of a local, State or Federal Government program
  • When the seller acquired the property through inheritance, or through a dissolution of marriage
  • When purchasing from an employer or relocation agency in connection with the relocation of an employee
  • When purchasing from a service member who received a deployment or permanent change of station order
  • Located in an area that was designated by the President as a federally declared disaster area based on certain parameters

• Loans for initial construction of a dwelling
• Temporary Bridge Loans (for 12 months or less)
• Loans secured by a new manufactured home

I wanted you to be aware of some of the additional requirements because it may take longer to process the loans due to the possibility of a 2^nd appraisal.