Great news: FHA has extended the waiver for their anti-flipping rule until the end of 2014 mainly in an effort to help stabilize real estate prices in areas most affected with foreclosures.
In 2003, FHA instituted the 90-day rule to prevent sales where the seller did minimal to no improvement to a property and resold it within 90 days at a much higher price. The extension of the waiver means that buyers will continue to be able to purchase properties with an FHA-insured loan, even if the seller has not held the title for 90 days or more. And they’ve extended the waiver until the end of 2014!
There are conditions, however:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. Lenders are required to ensure that the seller actually holds title to the property and there should be no “pattern” of previous flips of the property during the 12 months preceding the transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value.
- Inspections are required of all the key components of the building structure and systems when price jumps exceed 20 percent.
This is indeed good news for both buyers of flips and investors who work on flips. For more information, read this article on InmanNews. If you are an investor looking for good “flips,” contact me today and I’ll help you find the right property. If you are just starting to consider flipping properties, the book “Flip” is the first one I would get.