Things To Know About Property Flipping

Dated: 02/13/2018

Views: 149

Having been in real estate sales for 12 years, I often come across buyers that are interested in investing in properties and or house flipping.  It's always neat to see a home transform and the end result can be lucrative for the seller.  I came across an article, written by Shelly Cohn with Pilgrim Mortgage, that highlight the number of days an investor will need to hold a property and how a buyers loan type may affect the sale.


"Property Flipping is indicative of a practice whereby recently acquire property is resold for a considerable profit with an artificially inflated value.  The term Property Flipping refers to the purchase and subsequent resale of a property in a short period of time and can be a potential issue for both buyer and seller depending on the loan type." - Shelly Cohn


For example:


FHA Loans 

The eligibility of a property for a Mortgage insure by FHA is determined by the time that has elapsed between the date the seller acquired title to the property and the date of the execution of the sales contract that will result in The FHA-insured mortgage.

How FHA Affects Resales within 90 Days or Fewer After Acquisition:  

A property that is being sold within 90 days or fewer following the owners date of purchase is NOT eligible for an FHA insured mortgage.  In other words, the seller may not sell the home to a buyer with an FHA mortgage.  There is a 90 day waiting period before the owner can accept a buyer with an FHA loan.

How FHA Affects Resales Between 91-180 Days After Acquisition:

A buyer must obtain a second appraisal by another appraiser if the resale date of a property is between 91 and 180 days following the acquisition of the property by the sellers; and the re-sale price is 100% "over the purchase price" paid by the seller to acquire the property.

The required second appraisal from a different appraiser must include documentation to support the increased value.  There are rarely exceptions.


Conventional Loans and USDA Loans 

These types of loans do not have any defined guidelines regarding flips.  Underwriters have the discretion to call for a second appraisal or additional documentation if there is a large increase in sales price compared to the acquisition price paid by the seller or if the subject property has been owned by the seller for a very short time.


Va Loans

VA Loans do not have any rules on property flipping.


If you have questions regarding property flipping, I am happy to assist.  Please message me at (210)389-4715.  I can also be reached via email at [email protected]



Janet Wingrove has been a licensed realtor in the State of Texas since 2007 and has been selling real estate in San Antonio ever since.  "My #1 goal is to help people achieve their real estate dreams!" - Janet


Janet can be reached at (210)389-4715 or janet.sahouses.com


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