Monday, November 10, 2014

Flipped Homes

Over the past few years buyers and sellers have come to know the term “Flippers” in the real estate business.  Investors who buy primarily run down homes, fix them up, and resell them in  a short period of time.

In an attempt to protect buyers, FHA put restrictions on buying flipped homes, (90 day requirement on the seller owning the home before refinancing could be done with FHA).  As the housing crisis continued FHA waived these standard restrictions in an effort to stimulate sales in hard hit areas, (About 100,000 homes were resold using the waiver).

Now, FHA has plans to return to their previous guidelines beginning in January 2015, (per an article out of Washington DC).  This appears to mean that no contract can be written, no escrow opened, no appraisal ordered, nothing done during the first 90 days from the time the owner purchased the property. There will probably be additional guidelines to better define who this will impact but it is important to know this seems to be coming.

What does this mean to you as a buyer or seller?  Only investors who are flipping will be affected as a seller (we aren’t seeing to many flipped homes coming on the market as it has become harder for the investor to buy homes at a price point that makes sense for flipping).   This will only affect Buyers who are buying a recently flipped home (one purchased by the flipper in the last 90 days) it will prevent them from getting an FHA loan and therefore purchasing the home.  Your real estate agent can advise you on the time frame on each flipped home you may want to purchase. 

General signs of a flipped home, new paint, carpet, counter tops and appliances.  If a home appears to have been redone for selling it is wise to have your agent check to see when that home was purchased by the current owner.

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