I agree with everyone else. I’m in MD where a lot has been said about flipping. In fact, a couple of months ago, our Attorney General was all over the press saying that flipping is illegal. The problem, however, was over the use of inflated appraisals so the houses were sold to unsuspecting people for way over their actual value. What was illegal was the fraud in the appraisal. More recently, the attorney general was again in the news about flipping and he finally made that distinction. Flipping is NOT illegal. The use of fraudulent appraisals IS. It doesn’t take a rocket scientist to conclude that fraud is illegal. It apparently does take a rocket scientist to make not so subtle distinctions about free market economics.
Hey guys, I was talking with my realtor friend the other day, and he’s real interested in real estate investing and things, but we were talking, and I was telling him how I study Ron Legrand and all that, and how I was looking to start flipping with simultaneous closings, and he told me that it was illegal to do it that way, he says he has the article about it, someone please clear this up for me, so I don’t get arrested or sued when I try to do my first deal. What he said has delayed me somewhat in this, and I want to hear the truth. Thanks
Mark
Call it wholesaling if flipping is considered illegal! - Posted by Ray S(FL)
Posted by Ray S(FL) on December 30, 1999 at 22:39:56:
As much of the other respondents have stated this is nothing more than buying and selling. Whether you do it simultaneously or wait 6 months is of little relevance. The best thing that you can do is find a title co. or attorney in your area who understands simultaneous closes thoroughly.
I use my attorney for every sim. closing even if the first title co. involved knows how to do a sim. closing. It is just easier to have him do the second closing because he understands what I am doing and knows how to complete the closing no matter what.
Once you find professionals for your team this business becomes a whole lot more fun.
Oh yeah, People will tell you this is illegal even after you have done ten or twelve in a year. Don’t let people who have not been educated on your biz tell you about your biz. ( I don’t consider realtors educated unless they have been through the same training that you and I have been through)
I read all of the replies with great interest. I started in the No down creative real estate business in 1982. I was met with heavy opposition from Realtors, Lawyers and Banks. I successful bought over a half BILLION DOLLARS worth of real estate, without taking title via contract then assigning.
The problem is that flipping is not illegal, but working with ignorant people is dangerous and could get you in a lot of trouble. I was criminally prosecuted and later vindicated, but it took many years. Today the same Realtors, Banks, and Lawyer’s are using my methods and are flipping properties on a daily bases and are making fist full on cash!! what save me was not my attorney’s but all of the extensive legal research I did. I now have a law degree and am making a big come-back. If I can be of any help let me know
This past Sunday’s Hartford Courant had an article about people who came from New York City, bought apartment buildings and flipped and in the article it referred to the “illegal act of flipping…”
I’d ask the realtor how is it that 1,000’s of people across the country have been doing this for years and have never had a legal problem when each deal has been subject to legal scutiny. Realize that realors only (for the most part) regurgetate what they have been taught, anything beyond that they have to pick up on their own. I once had a realtor tell me that I had done something illegal (couldn’t tell me what) on a deal one time when I came out of closing with $6K in my pocket and nothing down going in. You definately don’t want to use these guys as nothing will get done. Good Luck
Re: Flipping Illegal? There is a wrong way and a right way. - Posted by Herbiejr
Posted by Herbiejr on December 28, 1999 at 20:14:36:
As long as you use a good title company and dont cut and paste as we call it, you will be ok. The only reason flipping is considered illegal is because attys will put title in someone elses name…appraisers will do the same. Just tell everyone what is going on and especially the title company.
On the subject of what is legal or illegal, Realtors can be fountains of misinformation. They hear about someone getting sued for screwing up something or someone, and they leap to the conclusion that this or that is illegal. Also, they have a zillion stupid rules and regulations that they have to follow, which they assume apply to everyone. They do not. Only to Realtors.
So, whatever your Realtor friend tells you, take it with a grain of salt, and check it out with a lawyer.
Posted by Randy -IL- on December 27, 1999 at 20:22:45:
Flipping is most certainly not illegal. In it’s simplest sense, flipping is only buying at wholesale and selling for retail or a profit. Nothing more. No magic, no frills.
Every time you shop at a grocery store, or any other retail shop for that matter, you are buying flipped property. When you buy a car, well it’s flipped too. The grocery owner or car dealer won’t tell you’re agent what is the actual cost of their bananas or Buick. But if they did tell what their cost is you’re agent would understand the concept.
On the other hand, flipping a property using fraudulent paperwork, unethical appraisals, inflated values, or any other lies is unethical and may constitute criminal fraud. These deals are the ones you read about in the papers. Papers only report the bad things and not good things. The ax murderer gets a front page spread while the hero firefighter who saves children may get a paragraph on page 16.
Real estate agents are clueless about the concepts of real estate investing. If they knew about investing, they certainly would not be selling RE for commissions! (the old story about jumping over dollars to get to the pennies)
Posted by Bill K. - - FL on December 27, 1999 at 14:59:13:
Flipping in itself is not illegal. In some areas they are falsifying appraisals and buyer qualifications which makes the deals fraudulent. Your Realtor friend is taking things out of context.