After negotiating and successfully buying a SS property, Have you had any problems flipping a SS property. I know most banks want at least 6 months seasoning otherwise will not finance a buyer. Pls advice. Thx.
i walked away from an ss for the same reason, the damn seasoning and in my state forget it!! i hear a lot of people talking about doing a ss but from what i understand isnt it incredibly rare?
You need to wait at least 6 months before flipping. If a potential buyer is approved for a FHA loan to buy your home, the FHA underwriter wants to see you , the current owner on title for at least 12 months & if they are approved for a conventional loan, the conventional underwriter wants you, the current owner, to be on title for at least 12 months or more. look at your expenses to hold on to it for that time period, reduce the short sale offer to the bank by that amount.
That’s what I was afraid of. So, all these people in this forum, when they say they made $40k, $60k etc on SS deal, is mostly after they have waited (holding title) 6-12 months? correct?
And this holds true of pre-foreclosures or any SFR purchase, I would imagine.
The amount of money you can make on a short sale is really not determined by the time they bought or sold it. When you look at the past due bal. for the foreclosed owner, expenses to hold on to the home during the seasoning period, CMA report for that subdivision or area, BPO report, etc. all of those factors are involved.
I’m a little confused by what you said. Is it 6 months or 12 months that most lenders require?
It depends on the type of mortgage loan a prospective buyer is approved for to buy your home.
If the buyer is approved for a FHA loan to buy your home, the FHA underwriter wants you, the owner, to be on title at least 12 months. Most conventional loans (the ones with the lowest interest rates) want you the owner to be on title for at least 6 months.
The last short sale I did the trust that I put it in was on title for a week! No seasoning issues whatsoever.
The sellers signed a trust agreement and warranty deed, then recorded the deed. Procured a buyer and closed about four weeks later, simple as that. I don’t know what lenders have what seasoning requirements but find brokers that don’t have these requirements and have your buyer use them.
The buyer on this particular deal had great credit and had a low fixed rate mortgage. So, as far as seasoning goes if you have to hold it for six to twelve months unless there is a ton of money in the deal this is more of a headache than I want to deal with.
If there was a ton of money in the deal that means a ton of equity and a bank won’t agree to a short pay when they have a BPO or appraisal for far more than you are offering. So where is the motivation for them to sell and take a huge loss? There is none- end of story.
Yes, they “want” you to have 12 months seasoned title. But, you really need to read HUD’s rule on property flipping. I’ve posted this previously. The rule is 3 months. After 91 days, you can actually close. But, you will be required to have a second appraisal. You might have to document all the repairs cost. A simple word doc or excel spreadsheet has always worked for me.
"HUD published the final FHA property flipping rule in May, 2003. The final rule states if the re-sale date is 90 days or less following the date of acquisition by the seller, the property is not eligible for FHA insurance. This is an improvement over the proposed rule which would of imposed a 180 day restriction before you would of been eligible for FHA insurance. Also in the final rule, if the re-sale date is between 91 days and 180 days then the property is generally eligible for FHA insurance, but HUD will require that the mortgagee obtain additional documentation if the re-sale price is 100 percent over the purchase price. The rule states that "such documentation must include an appraisal from another appraiser.
In December 2004 HUD published an Interim rule that broadens the exceptions to the property flipping time restrictions to include repossessed properties of all Federal agencies such as the Veterans Administration and the Rural Housing Service and to properties that have been acquired through inheritance.
Since the rule went into effect in 2003, it has proven to be a disincentive to legitimate contractors who improve houses and resell them at affordable prices. By eliminating the ability of legitimate investors to resell homes using FHA financing, the 90 day restriction has reduced the incentive for investors to buy and rehabilitate properties.
In the case of HUD-owned properties that are sold with FHA insurance, HUD gives priority to owner-occupant purchasers for a period of up to 30-days. However, there have been instances where properties have been sold to investors posing as owner occupant purchasers, and HUD has been criticized for its inability to prevent brokers who deliberately falsify the occupancy status of clients in the Department’s disposition program.
I do agree that conventional loans are different and do not fall under the HUD rules. My experience has been more of the sub-prime lenders have title seasoning issues. Funny since they are the ones that generally charge the higher rates .