Hi, I'm new to the real estate game. I just learned from a realtor that foreclosure flips cannot be sold for 90 days here in Texas. One one hand, this is good, since I have 90 days to rehab the house I want, instead of feeling the pressure to be done in 30 days or less, but finding out that I can't sell it for 90 days is insane. I will be paying interest and points on a hard money loan. I'm in Texas, and I'm wondering if anyone else has any experience with this here or in another state.
Forgot to mention that this is a Fannie Mae foreclosure; I don't know if the 90 day restriction applies to all foreclosures or just Fannie Mae ones.
Only applies to Fannie, and it has nothing to do with Tx.
Note, the 90 days is for transferring title to the buyer, not signing a contract, so it likely won’t file you up any.
BTW, that 90 day restriction also applies to You financing the property.....it restricts the sale or “encumbrance” for more than 120% of your purchase price, for 90 days.
Wayne, thank you so much for the reply. This career change of mine has such a steep learning curve and I'm happy I found this community.
So, my 50k house would be restricted to a hard money loan of 60k, including purchase price and repair financing? The house needs about 20k worth of repairs, so I'd need a 70k loan (63 k hard money and 7k private money is my estimate).
Account Closed This is simply a restriction fannie puts in the sale agreement. In my experience, 1% of flippers are out of a house in less than 90 days anyway. Your end buyer will need 45-60 days to close it once you have it under contract, after you've finished your rehab, so it probably is a moot point.
@Jason Hirko Ok thanks.
FHA has a 90 day rule. It applies to buyers, not sellers. If the buyer is using FHA financing, the seller must own the home for at least 90 days before the buyer can close.
I ran into that a couple of years ago on a flipped home. We had to extend the closing date because the seller didn't own the home for more than 90 days.
Account Closed If the seller has a restriction on selling the property within 90 days of ownership it should be clearly outlined in the seller addendum you signed. HUD, Fannie, and any other foreclosure seller I have dealt with all include a clause in their addendum.
@Michael Noto Ok, thanks Michael.
@Fred Heller Thanks, Fred.
This sounds scarier than it is. Your escrow period will likely be 30+ days, so really that gives you 60 days, and that is IF you get a Buyer under contract on the 1st day (and I HOPE you DO!)
Your rehab may run over 30 days (always plan for delays). Then there is some marketing time. So, you really aren't talking about alot of extra time you need to hold it.
Just keep track of your COE so that you can mark the calendar for the earliest YOUR end Buyer can close. If you get a Buyer on day 44, then you know the COE has to be 46 days from then.
@Cara Lonsdale Gotcha, thank you.
The FNMA 90 day rule is a deed restriction and will be 90 days from the date of recording. Many title companies will not provide title insurance within the 90 days even if it is sold for less than 120% of the purchase price
The Fha 90 day anti-flip rule is a restriction on a buyer of a property using an fha loan and is usually interpreted as no contract can be signed within the 90 day period. Some lenders may have additional overlays
@Greg H. Thanks!
Yep, the fha restriction for a Buyer of a flip is no Contract for 90 days, not their Closing.
@Wayne Brooks Thank you.