Rapid Appreciation / Property Flipping

 All transactions in which a property is purchased and resold quickly for a significant profit must be scrutinized closely for misrepresentation, which usually includes property value, property information, down payment, hidden transaction terms, or borrower qualifications. Chain of title history must be reviewed and title commitment ownership compared against the seller on the purchase agreement, the appraisal owner, and occupant information, and the Closing Disclosure. Parties in a trust or LLC must be identified to ensure they are an arms-length transaction between buyer and seller.  The seller of the property indicated on the contract of sale must be the same as the owner of record.

 Required for Homes Owned Less than 180-days

• Conventional & VA

  • Provide list of upgrades for appraiser to note in report.

  • Arm's-length

• FHA & USDA

  • Resales occurring < 90 days after acquisition:

    • Not permitted unless the seller is HUD or a bank.

    • Resales occurring between 91 days and 180 days after acquisition:

      • A second appraisal must be obtained if the resale price is 100% or more over the price paid by the seller to acquire the property.  I will pay for the second appraisal.

      • Contract must be dated after 91st day.

• USDA

  • If the increase is >20% the appraiser must supply interior photos of the renovations and comment on the cost of the repairs renovations and likely contribution to the value increase.

  • Arms-length.

Arms-length:  A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party.