Avoiding Seen As A Flipper From A Lender

Comments(11)

• 
  bgrossnickle19th January, 2004

  I copied this definition from this site - "Property "flipping" occurs when a recently acquired property is resold for a considerable profit with an artificially inflated value."
  
  Is your sales price a Fair Market Value? Explain flipping to the mortgage broker and request that he stop using the term flip. That he confusing flipping with seasoning.
  
  This broker is not an ally and might be the cause of some of the turmoil. Call the lender and ask if they have a seasoning requirement.
  
  Brenda

• 
  jmartinezclark19th January, 2004

  Brenda,
  Thanks for the reply. Yes, I am selling the property at fair market value. My opinion is that the lender considers that if a property exhanges hands within 6 months, it is a flip. Since the property is on a land trust and to the world I am just the trustee, the lender shouldn't call this a "flip" because the property hasn't changed hands.
  
  Thanks,
  Julio.

• 
  bgrossnickle19th January, 2004

  My point is that you must correct everyone each time they use the word flip incorrectly. You don't seem to mind when people who are working for you and with you use the word incorrectly and only aggrevate an already touch situation.
  
  This issue is seasoning, not flipping.
  
  Brenda

• 
  patricc6820th January, 2004

  brenda, seasoning could be the result of flipping or quick turn around.. you dont acquire property through seasoning, but can through a flip--"cause and effect" or "for every action there is a reaction".. the terms dont mean the same but are the effects of the other=seasoning..
  
  regards-pat

• 
  bpteos20th January, 2004

  I feel that flipping properties is not the issue to the prospective lender,but the short seasoning of the title is more of an issue for lenders. Understand that there are lenders out there that have either no title seasoning or short title seasoning underwriting requirements. The biggest problem is finding a mortgage broker that knows who these lenders are. I recommend finding a mortgage broker that specilaize in orginating sub prime loans. They generally know who the more liberal lenders are that have relaxed underwriting guidelines.[ Edited by bpteos on Date 01/20/2004 ]

• 
  Queenjewel20th January, 2004

  [quote]
  On 2004-01-19 17:42, jmartinezclark wrote:
  Hello,
  I got a property in which I just did a shortsale. I put this property on a trust, and I recorded the warranty deed 2 months ago. I am about to sell the property now to a retail end buyer, and my buyer's mortgage broker is telling me that he is already pre-approved for a loan. He is also telling me that it will be difficult to get approval for this loan because the lender will see this as a "flip." The mortgage broker is saying now that he will have to look for another lender that is not so strict about "flips" and subsecuently the deal will take more time to close.
  
  Any ideas on how to prevent from being seen as "flippers" in front of lenders?
  
  Thanks!
  [/Try Argent Mortgage. They don't hve seasoning requirements.quote]

• 
  bobabby20th January, 2004

  Is the buyer using FHA financing? If yes then you hv to wait 3 mos to resell according to their regulations. They consider anything under 3 mos a flip.
  
  Bob

• 
  rajwarrior20th January, 2004

  Just to clarify.
  
  The term flipping refers to any RE transaction in which you hold for a short period of time. An example is the original poster, where they bought a property only 2 months ago and are now reselling it.
  
  What Brenda's definition above refers to his ILLEGAL FLIPPING SCAM. These are done as she described, buying a property and thru an appraiser's and/or lender's help, the scamming investor sells the property for an inflated value. Because of these scams, the term flipping has gotten some serious negative press, however, there is nothing illegal or unethical about an honest "flip." Because of all of it's bad press, I prefer the term quick-turn, but it's all the same.
  
  Now to the question that was asked, the lender really doesn't care if you're a "flipper" or not. The issue with the lender is title seasoning. Seasoning refers to the amount of time that you, the seller, has owned, or been on title, the property for which you are selling. There is really nothing that you can do about this except own the property longer.
  
  As far as getting buyers financed, you should search for a mortgage broker that can handle the situation. Practically any decent broker will have some loan options that require little to no seasoing, though some may carry slightly higher interest rates and/or fees. To help the deal, you may have to agree to pay closing costs or reduce the price a bit to make up the difference in rates/fees.
  
  Roger

• 
  thomasgsweat21st January, 2004

  It also helps if you can show the improvements made to the property.

• 
  InActive_Account21st January, 2004

  Find a mortgage broker who understands why you are holding the house short www.term.The most likely mortgage brokers will be some who specialize in sub-prime www.loans.Talk to the underwriter at the broker your buyer is using.

• 
  FSMCO22nd January, 2004

  There are definately lenders out there that have no seasoning, or put caps on the appreciation of the property during the first year. One common cap limit is 10%.
  
  As mentioned earlier, any improvements made to the property should be documented. There is a space on the new 2004 1003 loan application for entering this information in.
  
  While a significant jump in value will raise an underwriters eyebrows and may trigger an appraisal field review, as long as the property has been appraised by a liscensed appraiser using the appropriate comps that can support the sales price, you should be okay.
  
  Keep looking for financing. A good broker should find you the appropriate lender in minutes, as far as seasoning is concerned. Lenders sesoning requirements are typically listed in the program guidelines or matrix.