In reading tonight there was some discussion about having to hold a short sale property six or twelve months before selling. I have never heard this in Georgia. Someone please help. I am close to closing on two properties.
Phil
This is first that I am seeing/hearing too. Is this something state thing of or same for all state? Anyone in Texas sold SS property before six months?
Please help.
It’s not always a state law. Most the time it is either a city or county law that requires “seasoning” in properties. They do this to avoid equity stripping flipping. In one of the cities I work in they have seasoning of 12 months before title transfers. Now, one loop hole is that there is no law stating that you have to transfer title when you buy/sell real estate. So I buy, rehab or flip then let the title transfer go between the HO I got the property from and the end buyer.
The other way to get around it is to do substantial rehab to the property before flipping to the end buyer. As long as I do that the city doesn’t care that I’m flipping it. This part of the law was made mainly for contractors.
Other times it’s a lender requirement.
In other words, if you find a buyer and their lender sees that you’ve only owned it for a couple of months (or less), they may not agree to provide funding to that buyer.
To avoid having to deal with this, a smart move is to have your own list of lenders that don’t have issues with short-term ownership and will lend to your buyers. Many of these are sub-prime lenders with a bit higher rates, but sometimes they are as competitive as the major lenders.
Hope this helps…
are you talking about redemption periods or are you talking about chain of title issues here, the post seemed to have changed in mid stream.
if you are using land trust in which to hold and convey title you shouldn’t have any chani of title issues, that means your end buyers lender will not have to see you have only owned it for 2 months.
green queen
This topic was never about redemption periods - it was about requiring the buyer of a REO to own it for xx months to satisfy either local govt or lender seasoning requirements.
oh sorry Bob… you see the discussion is not part of the thread !!! is it ? or do you see something I can’t ???
Hope your PR skill are better when your clients make a mistake.
Hi Green Queen,
I’m sorry - I don’t understand what you are saying… Could you rephrase your last reply?
The discussion was about selling a property quickly after buying it. Right of redemption is only in foreclosures where the original owner has a right (in some states) to buy back the property that has gone to auction and sold to the highest bidder after a period of xx months.
If a short sale is completed, then a foreclosure never happened, so no right of redemption is possible.
I’ve never heard of a lender requiring this on a short sale, but as Foreclosure Negotiator said, some local governments do it to mitigate illegal or immoral flipping.
Hope this helps…
Bob with all due respect I think you have lost the plot here.
at the beginning of the thrread it mentions a discussion earlier tonight it does not give specifics !!
Thank you for your concern.
The question was whether you had to hold onto a property for a period of 6-12 months after buying the house in a short sale. Pcagle, I live in Georgia also and I have not heard that. It is probably due to the seasoning. If it is in Atlanta, we are scruitinized more because of the high number of mortgage frauds.
Jag,
There is no stipulation by any bank that when you do a shortsale you must hold on to it for 12 months.
Personally they way I have been taught is to quick turn the property and get a third party buyer to fund out the deal.
Now on saying that, if you are selling a property to someone who is gaining FHA funding then it may be a challenge for seasoning, or chain of title issues.
Now if you have taken title the correct way, ‘land trust’ then you should have the original sellers last name on it, i.e “smith Residential Land Trust” so your chain of title will not be broken.
If there is any questions in regard to chain of title then you can produce your trust agreement to show the “seller” had put it in a trust for state purposes, and the agreement will show them as beneficial interest too.
Hope this clears it up a little.
Should you always try and do a short sale with folks in preforeclosure no matter if they have a lot of equity in the house? Is there any law that says that you can only do a short sale on foreclosure property if it meets certain guidelines or can you just do them to create even more equity?
As long as you can justify the discount then go for it. This will all depend on comps and how much you can influence the BPO.
what is BPO?
Brokers Price Opinion
When a debtor falls in to default the banl ( lender) sends out a drive by BPO, who is usually a realtor. If it is FHA it will be a full appraisal.
Once you get control of the property it is your job to control the bank and get them to do an internal BPO ( remember the first one is only a drive by, they don’t know what it’s like inside) you then become the access person for the property and you need to point out all the bad points around the house and give them a rough idea of what value they need report back to the bank in order for you to complete the short sale.
THe BPO can make or break your deal to some extent.
If how ever the BPO comes back high ( which realtors generally do ) you then must contest the BPO since he /she is not a licenced contractor and really doesnt know how much it is to repair.
hope this gives you an idea.