We Love It! But Was That House Flipped?

People often ask, "do I really need my own REALTOR® when buying a house?"

Yes, you absolutely do and here is one of the biggest reasons - buying a flipped house just got more complicated if you're getting a FHA Loan. Why? It's because the FHA Prohibition on Property Flipping is back into effect, the 2010 waiver has expired.

In 2010, to help move distressed homes, the FHA decided to waive the 90-day prohibition against financing short term flips. The goal was to stimulate and rehabilitate neighborhoods hard hit by the mortgage crisis and recession. 

FHA no longer allows mortgage financing on a property where the owner of record has owned the property less than 90 days. If ownership is from 91 – 180 days, there are additional requirements such as a second appraisal, lender ordered home inspection, and having seller document rehab costs with receipts, etc. VA or Veterans and some Conventional Loans may not not affected. 

Many home buyers, and new investors don't realize this and it can become a big complication to getting the deal closed.

With additional inspections and appraisals settlement and closing costs could go up, which leads to another frequently asked question, "who pays for the home inspection if it is a lender requirement?" The borrower is allowed to pay for this and the general consensus is that the buyer and seller may negotiate these extra inspections and appraisals into the purchase agreement terms. Always be sure to get a "Good Faith Estimate" from your lender before you offer.

We strongly recommend that Buyers should be represented by a Full-Time REALTOR® who should always look up the property in the tax records and ask the listing agent what date the seller closed on the property and if it has been rehabilitated. A list of repairs and improvements is also a good thing to have to determine the extent of the rehab prior to negotiations. Buying directly from an unrepresented seller/investor of FSBO could cost you thousands in non-refundable inspections and appraisal costs. You could also lose weeks or months of time only to find out the sale is no qualified for your approved financing.

Going at it alone, or using a part-time agent that is not trained to keep up with the ever changing issues could be a very costly mistake. There are thousands of "Real Estate Agents" in Hampton Roads, and according to REIN stats, only 50% of these agents were involved in 2 sales or less in a year. To avoid this you want to interview 2-3 Full-Time REALTORS® that have a track record of success and can provide references. It isn't enough to like an agent but you want that agent to have the experience, character and integrity to get the job done.

Our Perfecthouse Team is filled with with the experience and know how to navigate tricky housing situations like this one. We'd love to help you find your PerfectHouse.