How are flippers in CT handling title seasoning issues. I would assume your retail buyers are mostly first time home buyers using FHA or similar programs which have the restriction of no transfer for 90 days. Can a Land Trust be used to get around this?
@Greg Wright We have not run into this since the regulations changed. The two buyers I have dealt with (1 as a realtor, 1 as an investor) here in CT this year so far that have been under contract and eventually purchased flipped properties before the 90-day mark both used conventional financing.
One of the buyers was a first-time home buyer, but had financing through USAA where she put 10% down.
I rehabbed in the past but have not done it in several years, just trying to catch up on changes. Do you know anything about the Wolcott market seems to be a lot of houses sitting for 200 days plus?
No, a land trust doesn't help. An FHA buyer can't buy the beneficial interest of a land trust.
Thanks Wayne good to know.
@Greg Wright There are a lot of reasons why houses in a town like Wolcott tend to sit in my opinion and here are some of them.
- high taxes
- the fact that it is near waterbury scares people away in some cases
- a lot of 1st time home buyers do not want to deal with septic systems and wells
- It is not very convenient to Hartford or New Haven from there
- the inventory that sits there is overpriced
With all of that said, there are beautiful areas of Wolcott as I am sure you know. The main issue there is overpriced inventory. As a whole if a sale price for a house around here reflects the condition of the house and is accurate it will sell. A lot of people look to far into why a house doesn't sell. In most cases it is just priced to high.
I don't think there is a true "way around" the 90 day rule when selling to an FHA buyer - you have to wait it out.
If it's a strong offer, the one thing that you can do is execute a contract prior to the 60 day mark (that way the buyer can start due diligence - they can proceed with home inspections, WDO, etc...pretty much everything but the FHA appraisal), then execute a new contract (with the same or very similar terms) on day 91.
I have a flip under contract right now with this exact scenario...it's been a long road to closing (36 days and counting!), but not the end of the world.
Try, possession prior to closing, rent paid, then close on day 91. I wouldn't rent until they have a loan commitment. Wayne is correct and you don't need convoluted trusts stuff for a few days in carrying expenses, just follow the rules and customary tactics. :)
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