Frequently Asked Questions about Flips

Frequently asked questions about Flips 1. What is a flip? Call Tami Winbury Keller Williams Realty for information on houses for sale 805-798-3412 http://www.venturacountyhomesforsale.net a. Any transfer of title within the past 12 months. 1) Sales <90 days. The Transaction must be exempt or meet the waiver requirements to be allowed. 2) Any sale within 91-180 days that has appreciated 100% or more requires a 2nd appraisal. 3) Any sale with 181-365 days that has appreciated 5% or more requires the u/w to evaluate the increases and determine the possibility that HUD may choose to ask for a 2nd appraisal at post audit review . (We do not automatically condition for a 2nd appraisal) Exception would be when the person transfers title to their sole LLC or Corp. 2. What must I do if my property is a true flip? The transaction must be exempt from the 90 day flip rule OR it must be eligible for the Waiver to the 90 day restriction. If not, the contract cannot be executed until after 90 days from the seller’s acquisition. Note: Waivers are not allowed on Bonds, DAP’s or 203k loans. 3. What would be considered an Exception to the <90 day rule a. If the Seller is a State or Federally Charter Institution seller an REO property. b. If the property was transferred to the employer or relocation company in connection with a relocation of an employee (aka the owner of the property) The u/w must provide in his/her file the documentation that show the original owner was being relocated by the employer. c. If the seller acquired the property by inheritance. d. Please refer to the FHA u/w guidelines section 37 for additional exceptions for Federal, State and Local government agencies. 4. What do I need to look for in regards to obtaining the <90 day Waiver a. Is this an Arms Length with no Identity of Interest Transaction? b. Does the seller hold recorded title? c. If the seller is an LLC, Corporation or Trust; are let in good standing with the state and federal regulations? d. Is there anything in the properties profile that shows this property had previous flipping within the past 12 months prior to the Sales contract? e. What was the sellers original purchase price? f. Was the property marketed openly. The appraisal will need to comment on this. The appraisal needs to have the any dates and sales prices that were listed or changed from the time is was put out for sale to our contract. This may be difficult to document if it was a FSBO. g. If the sales price is <20% a second appraisal and property inspection is not required. h. If the new sales price is at 20% or more than the sellers original purchase price, a 2nd appraisal and a property inspection is required. The 2nd appraisal may not be charged to the borrower. 5. When is a second appraisal required? a. If the sale is less than 90 days and requires the flip “waiver” and the property value has increased 20% or more as per the waiver requirement OR b. All sales, regardless of the seller, between 91-180 days and the increase is 100% or more. c. The cost may not be charge to the borrower. Note: This does not apply to sales less than 90 days and have documentation that it’s exempt from the 90 day restriction as per ML 06-1 Robert Clark Senior Loan Officer 805-322-3418 Direct Tami Winbury Keller Williams Realty DRE#01878369 http://www.LiveOjai.com