Closing Question on recent flip ?!

4 Replies

Good afternoon BP members!

I've got a question and was curious to hear others experiences.

We have a home under contract that we recently flipped. The buyer is using A local bank that does their own closing.

Our Purchase price was $91500 and after rehab completion we now have it under contract for $180k. My concern is when the bank pulls my deed what will happen when they see the original purchase price only 5 months prior?

(Of course that bank will also be doing the appraisal too)

All the best.

Paul

Often a 2nd appraisal is required on flips. In my market it is customary for the seller to pay for the 2nd appraisal when they are needed. You will also need to substantiate the price to the appraiser. So you will need sales comps at the sales price or higher. If your comps are lower in price, expect appraisal problems.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

Back in CT it never came up on any of my flips. I never had to substantiate anything, so maybe the same will apply. I had a $91,500 purchase and then a $250,000 sale on the same house, sold it to a couple with a VA loan, and the bank didn't ask for anything from me. Other areas may vary, but this has been my experience.

Originally posted by @Paul K. McCoy :

Good afternoon BP members!

I've got a question and was curious to hear others experiences.

We have a home under contract that we recently flipped. The buyer is using A local bank that does their own closing.

Our Purchase price was $91500 and after rehab completion we now have it under contract for $180k. My concern is when the bank pulls my deed what will happen when they see the original purchase price only 5 months prior?

(Of course that bank will also be doing the appraisal too)

All the best.

Paul

FHA has an anti-flip rule that might jam you up, otherwise do not worry about it.

If your buyer is using FHA, then show them this commercial to get them out of it, expect delays if they insist on using FHA, or find a new buyer.

Chris Mason, Lender in CA (#1220177) and California (#1220177)
415-846-9211

Thanks so much for the insight guys, I really appreciate it!

-Paul

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