how can flipping property become illegal in texas?
Buying cheap property that you got a deal on and then selling it for more than you paid should never become illegal. If it does, I am heading for Canada!
I believe the term flipping is also being used for investors who collude to jack up an appraisal so that a house can be sold for much more than it’s worth, leaving the buyer significantly “upside down” on their house, thus unable to sell without losing money. That’s what is illegal, not buying a house below market and reselling it quickly. However, some banks won’t finance homes that have been purchased within the past 6 months, requiring “seasoning.” I’m not sure what their issue is, but it’s not limited to Texas.
In the DFW area, flipping refers to putting a house under contract, then assigning that contract to an investor who will pay you a “finder’s fee”. It is that term, “finder’s fee” where there has been some debate whether or not it is legal. For the most part, the term now used is “assignment fee” and there are no problems with that.
Further, there has been some debate as to whether or not assigning a contract is legal. As long as when you put a house under contract you put “Your Name or as assigns” as the buyer, you are fine. Thin when it come time to Flip it, a simple one or two page document is all you need.