Over the years, I have yet to hear a single validadtion of why a second appraisal is required on flip properties. I think it is a worthles practice that does nothing more than pretend that there is a real purpose behind the farce. But as Beverly warns, both buying and selling agents must be vigilant determining the lenders requirements up front in or to prevent any surprises.
Over the years we have run in to a few cases with our buyers. We just had another situation arise with one of our listings in Culpeper, VA.
Home was purchased in May by my investor, went on the market as a "flip", contract received with a Sept settlement date. We were passed the 90 days but under writing was requiring a second appraisal, because it was less than six months. When questioned and upon further review, all they needed was a desk top review(AVM) and not an entire appraisal. It appears we have to be on our toes with guidelines. Every bank is different in regards of hanging on to certain conditions.
The commom concensus we have found is "if a home has been sold within the past 12 months and the increase in sales price is 20% or more, it is the underwriter’s discretion as to whether or not a second appraisal is needed." thanks Tom for the info
If you have a purchaser that is looking at home..
1. you should do your homework enough to know the history of the home
2. is it an investor flip?
3. what is the investors yield?
4. talk to your purchasers lender before writing an offer on the property if is a flip
Upon the demand of the appraisal we researched the guidelines ourselves, here is the actual article on HUD.GOV FHA EXTENDS WAIVER OF ANTI-FLIPPING REGULATIONS THROUGH 2012
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