Title Seasoning Experience
I've heard a lot of talk about title seasoning problems with flipping properties. I haven't had a problem but I'm curious if others have. Especially since I'm wanting to purchase another rehab soon. I don't care about what you have read or such and I know that FHA restrictions are there. Has anyone had first hand experience with seasoning issues?
Thanks to all!
It depends a lot on the lender, a bit on the location, and a bit on the individual circumstances.
An associate of mine purchased a property at a very steep discount last year. He found a buyer at a little less than FMV. However, the lender would not lend because the home had been purchased 2 months earlier at $25K less than the current purchase price. The deal fell through and my asociate, who was just getting married and needed a bigger house now anyway, moved in, refinanced and pulled out 25K in equity.
Both my associate and I have spoken with a number of lenders and mtg brokers in the past year about this situation. Utah, as some of you may know, over the past few years has been 2nd or 3rd in the nation for loan fraud, foreclosures, and bankruptcies. As a result lenders are very cautious when it comes to funding here and demand that everything be up to par and above board, and have additional restrictions. Depending on the particulars of your area, this may be a factor.
Most lenders I have personally talked to said that 6 months seasoning is their minimum. However a small number of these lenders said that with TWO independent appraisals and a detailed letter of expalanation as to why the increased price is legitimate they MAY waive the seasoning requirement. There were a handful of lenders who said they had loan programs where seasoning would not be a problem.
The bottom line is really to do your homework and build relationships with several lenders and get bomb-proof financing lined up beforehand. Find out which is the most flexible and if you can, get it in writing that they can fund without seasoning. Don't believe what any lender says until you have worked with them on a few deals. They often promise the sky and have trouble delivering on the non-standard deals that we do.
-rup
rup has pretty much said it. There are alot of factors involved.
Lenders are very nervous about lending out on anything that has less than 6 months seasoning. Some more conservative lenders require even more. This usually doesn't affect true rehabbers as it usually takes them about 6 months to fix, market, and sell a property anyway.
Personally, I had a property that we sold outright within three months. The only requirements were that I show that I bought it as a destressed sale (REO, pre-fore, estate, etc.), show a certain $$$ amount of repairs, and that it appraise for the current sale price. Kind of annoying, but not really a big problem.
Roger
I do a lot of filps with zero seasoning ( double closings) Some bank and some title companies will not do it. I have to prepare in advance - including the financing for the final buyer. Be upfront with everybody - way in advance of closing.
The title company must know original prices as well as the final buyer. If the final buyer is financing, make sure his lender knows.
Gregg
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