OfflineI made an offer on an REO. I have an accepted offer of $45,500 cash. on a bank owned home in Idaho. As I was signing the banks additional paperwork/addendums it was stated that within 90 days of the home being purchased from the bank it cannot be sold for anymore than 120% of the purchase price. I am buying this property to fix and flip and was intending to make more than 20% profit. I was also hoping to do it in less than 3 months from closing,possibly even assigning the contract. Has anyone else dealt with this? Does anyone know of ways around it or have any ideas as to how I can get around this? I'm getting this property at a good enough discount that I could probably sell it or assign it for more than 20% profit but this deed restriction really blows that right out of the water. Any feedback will be appreciated. Thanks.
Jeff
Deed restrictions on REO's
Posted on: Tue, 10/06/2009 - 03:19
Deed restrictions on REO's
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- by jgmiller
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the seasoning period that they've(banks) have come out with later this year. Unless it's stated somewhere in that contract that you cannot assign the property, then lock it up and assign it to another investor for your 20%.
Bryant Slade
Sounds as if you have money for holding costs if you are planning on renovating. 90 days is not that long depending on the amount of work needed and who is doing it. You could try a lease option to ride out the 90 days. The renter could do the work instead of a down payment or not. Just make sure it is legal, I am a beginner not an attorney. It sounds as if it is a bank seasoning and not Affordable Housing which is usually dead restricted for years given the 90 days. Find out why it is dead restricted. If you are caught and want to move on take the 20% and move on to the next deal.
Good luck.
Theresa
yep you got hit with seasoning restriction by the lender. Like other DGer said stretch out the renovation over the 90 day period since you won't have a mortgage to pay.
Jeff
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
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I would like to thank you all for your responses.
Jeff, The Bank wont allow an Assignment of Contract.
They will hold You Responsible and will keep Your Deposit if You dont
make good on Your Close.Im from Idaho lets get together. Your Post comment below
Hawk.
I made an offer on an REO. I have an accepted offer of $45,500 cash. on a bank owned home in Idaho. As I was signing the banks additional paperwork/addendums it was stated that within 90 days of the home being purchased from the bank it cannot be sold for anymore than 120% of the purchase price. I am buying this property to fix and flip and was intending to make more than 20% profit. I was also hoping to do it in less than 3 months from closing,possibly even assigning the contract. Has anyone else dealt with this? Does anyone know of ways around it or have any ideas as to how I can get around this? I'm getting this property at a good enough discount that I could probably sell it or assign it for more than 20% profit but this deed restriction really blows that right out of the water. Any feedback will be appreciated. Thanks.
Jeff