Flipping, also known as the buying and selling of a home, is not illegal in any shape way or form. There is absolutely nothing wrong with buying a home cheap and selling it for more then what you bought it for. There is also nothing wrong with buying a home, fixing it up, and selling it for way over market value. If your buyer wants to pay you way over market value, and they have the means to pay you, then it is their choice. They can do that and so can you without any recourse.
The problem arises when a lender is involved. What people typically refer to as “illegal flipping” should be called mortgage fraud. The media has given real estate investors in general a bad name, because they aren’t focusing on the real problem. Without mortgage fraud, homes could not be sold for more then what they are worth when a lender is involved. Lenders want to lend based off of what a house is worth today. They lend at varying different Loan to Value ratios depending upon the borrower?s credit worthiness.
The problem with “illegal flipping” is when investors, mortgage brokers, loan officers, appraisers, etc? get together to “create” a better picture of a loan package to a lender. They do things such as inflating appraisals, gifting down payment, drawing up false w-2’s, manufacturing pay stubs, writing credit letters, etc?
If you buy houses low, and sell houses high, but avoid mortgage fraud, then you are not doing anything illegal. You don’t have anything to worry about.
Hi my name is jay i’m from harrisburg pa. i am just trying to get into this buisness and i have been tring to get into a few real estate groups in my area.in the process i’ve heard from a realtor/broker that flipping is illegal in pa.she said you have to be careful in doing so.if anyone in pa could give me info on the subject i would be grateful.thanks jay
Flipping is not illegal… I don’t know why this crap persists… it is no more illegal to buy and sell a house than it is to buy and sell a sock.
Obviously with houses there are more issues to be concerned with but it is not illegal to buy a property and resell it for more money.
IT is also not illegal to get a contract on a property for a particular price and then sell that contract to someone else for a profit.
You need to make sure that you don’t ever “act as a broker” which is put a buyer and a seller together and make money off that without haveing some sort of EQITABLE STAKE in the transaction… if you do that, you can get in trouble.
Posted by Big Harold on October 04, 2003 at 19:00:32:
Jay,
Guess what - flipping is my full time job, and what’s more, I DO IT RIGHT IN HARRISBURG, PA!! I had an idiot title company tell me the same thing, and you know what I did - I found another title company! In no way, shape, or form is it illegal. How could buying something for one price and selling it for a profit be illegal? If that were the case, Wal-Mart would have to shut down right now. Don’t listen to that - I’ve been doing very well flipping properties right here. This place is a gold mine - of course, you’ll be my competition here now, so the advice will now stop! Good luck.