Posted by Brenda on February 13, 2001 at 14:45:17:
It didn’t apply in my case because my name was on the title for over a year on that house.
Flipping to retail buyer - Posted by Jeremy Berrong
Posted by Jeremy Berrong on February 13, 2001 at 07:16:18:
I have a property under contract and I had a realtor fax me an offer. Buyers just want to move in and don’t care about new paint or carpet. It has a terrazo floor so we might be able to get by with no carpet. They are goin FHA with some kind of downpayment assistance.
So my question is what repairs need to be made in order to obtain financing? Also will there be a seasoning issue( I am in Orlando,FL)? I have never had a problem before with seasoning, but this will be like a triple close which I am worried might throw up a flag. Although, there may be a month in between my close and the retail buyers close.
As always thanks in advance for any and all responses. Please respond if you need more details.
Try Midwest Notes - Posted by Greg-IN
Posted by Greg-IN on February 13, 2001 at 20:56:10:
We’ve done quit a few flips with them and they generally are not bothered by runups in value or no seasoning as long as they have a national appraisal. I think www.midwestnotes.com.
Re: Flipping to retail buyer - Posted by Ron (MD)
Posted by Ron (MD) on February 13, 2001 at 09:30:41:
Jeremy,
I work in Baltimore and FHA is very tough on unseasoned sales. I don’t know what the situation is where you are. Here, as soon as the lender requests a case number from FHA, HUD sends to them a notice that the seller has been in title for less than 12 months and the seller’s purchase price was $x. They warn the lender that the appraisal must be done properly and it will be carefully scrutinized by FHA. The worst part is that FHA won’t look at the appraisal until the lender has approved the loan. At that time, you run the risk of FHA abruptly killing the deal. The lender usually wants me to document what repairs I have done to the house to justify the increase in value. One lender wanted copies of repair receipts.
Several months ago, I bought a house in relatively good condition. I had a buyer that wanted to buy it as-is, giving me a quick $15-$20k profit. I wouldn’t do it because of the FHA issue. It doesn’t matter how cheap I’m able to buy a house for…if FHA is guaranteeing the loan, they want to see that I’ve done repairs to the house to justify the increase in price.
When a realtor brings me a contract, I won’t consider it unless the buyer has been pre-qualified. Then, before I’ll sign the contract, I talk directly to the buyer’s loan officer to confirm that he/she is real comfortable with the buyer. You should do this, but at the same time, talk with the lender about this particular situation.
Some lenders will not lend if the seller has been in title for less than one year. You need to verify up front that this will not be a problem with the lender or FHA (and the loan officer should be able to answer both questions).
If it is a problem, with the lender and/or FHA, you may be able to move the buyer to another lender that is more comfortable with unseasoned properties or, better yet, to a conventional loan.
Ron Guy
Wait for FHA Inspection - Posted by Brenda
Posted by Brenda on February 13, 2001 at 08:43:48:
If I were you, I would wait for the FHA appraiser to come in and give me the list of their required repairs. That way, you’re not fixing stuff unnecessarily. I sold a fixer to a young couple buying through FHA, and the inspector gave me a very reasonable list of required repairs - little stuff like painting the window frames, fixing sidewalk cracks and tightening railing on stairways. In that situation, the buyer offered to do the repairs because he had agreed to buy the house “as is” from me. I was all stressed about getting the repairs done properly so they could get their loan, and when the inspector came back, he didn’t even do more than glance at half the stuff we had done!
Good luck,
Brenda