The seller purchased the property at auction on the 15th of February. They paid exactly $65,000 for the property. The listing price they chose is $110,000 which is 15% lower than the most recently sold prices in the neighborhood. They listed the property on the 16th of February and your client makes their offer of $100,000 on the 17th of February.
Don't count on getting a loan approval unless the seller has owned the property for 91 days. Unless the seller is the lender who foreclosed on the property or received it into inventory from a deed in lieu. The 90 day rule is an FHA rule but it is mostly adopted by Fannie, Freddie and even portfolio lenders.
The best thing to do is ask the loan officer the buyer is working with if the loan the buyer can qualify for has seasoning requirements on title. Now if the seller purchased the property, did some rehab and documented the cost of that rehab you may be able to get around this seller seasoning issue with Fannie. As a general rule, in today's climate, flipping for big profits without doing big work, is unlikely at best. It can be done and that is one of the things we specialize in but if we find out after the offer has been made and accepted you may find yourself making a new offer so call first. First as in before you make the offer.
So why did I bring up the subject if I'm not going to give answers? Actually, if I'm doing the loan, I will give answers -very specific and very correct ones. FHA, Fannie and Freddie are all different and within Fannie and Freddie the different loan programs have different parameters. Who you gonna call?
THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.
EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.
Tony & Darcy - thanks. They don't even have to be investors to buy :) When you find some WHISTLE because I actually do have plenty of money for a few of the buyers.
Lane - I'll be sitting by the phone! Conference call from 10 to 11 but I'll be available after that.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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Ken, good information to know! Now all I need are some investors!