Lender Requirements and Restrictions when selling a Flip

[Rob Willis]

BP - I working on my first flip and looks to be profitable, but I was discussing with my Lender, and he mentioned there were restrictions with the buyer's lender when selling if the price will be more than 20% more than my purchase price of the house.  

1. If the Buyer is an FHA - The contract cannot be executed till after 91 days have passed for any amount of money.

2.  A conventional loan has no timeline but if the purchase price is more than 20% higher than what the seller paid for the property (Me), then the lender for the buyer will require 2 appraisals to confirm value, and proof of work performed.

Is this normal for Flips, and Should I have any concerns about it?   Also this does not seem to be regional to Texas.

My situation is that I bought the house all Cash, and put in around 25K in rehab and looks to be able to sell well above 20% of what I paid.  

Thank you for any guidance . . .

[Keith Jourdan]

Here's how it works in Michigan (dont know if it varies in other states )

For FHA financing the title has to be seasoned for 90 days in order to enter into a purchase agreement . If purchase agreement price is over double the price you paid for the property less then 180 days a go you need 2 appraisals . They take the lower of the 2. I have seen huge differences in the 2 appraisals, one even a $55k difference. FHA seems like they don't want to loan on flips, hence the strict rules and seemingly low appraisals.

Conventional financing has no flip rules . Same as any other house .

Bottom line - wait for conventional offer .