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Flipping Real Estate – Update on House #6
Real Estate Investing With Foreclosures
Flipping real estate, what’s up with House #6?
House #6 went on the market at the end of November. Just a few weeks after listing it we got the house under contract with a full price offer. However, we have had delay after delay in getting the buyers loan approved. Let me give you a quick recap.
We went through the home inspection just fine. The inspector found just a few small issues. Let’s see…he asked us to fix a stone façade in front of the house that we knew about but left unfixed until the inspection (When flipping real estate I’ve learned to always leave something minor for the inspector to call out so that they feel they have done their job and the buyer feels he is getting his money’s worth out of the home inspection).
We also repaired a window glass that had cracked and somehow we had not noticed, replaced a couple of window screens and a couple of weather strips on some doors. That was all. Then it was time for the appraisal.
I always meet the appraiser at the house so I can walk them through all the repairs we have done and also provide them with information on recent nearby sales. To do this I always tell the mortgage lender that there is no lockbox at the house and that I need to be present so the appraiser can get in. Sure enough I never got a call from the appraiser until they are standing in front of the house .
The house appraised just fine which is always a major concern when flipping real estate. However by now I should have gotten a clue that this mortgage lender was not a sharp guy. My feeling was confirmed when two weeks later, after the appraisal had long been completed, the loan was not in underwriting yet and he was not sure why!! What the heck were they waiting for?
If you ever come across Home Savings of America, do everything in your power to not use them for anything, totally worthless.
Initially we were trying to close before Christmas. Since this clearly was not going to happen we had to extend our contract for the first time. No sooner had we done this when the mortgage lender came back claiming the house is in a flood plain and the buyer would need to get flood insurance. This sucks because not only is it one more delay to the closing but another opportunity for the buyer to try and get out of the contract as if the lender had already not done enough.
I quickly got a lesson on flood plains and flood insurance and learned that we need a surveyor to do an elevation certificate that the insurer uses to issue the flood insurance policy. The buyer of course, wanted me to pay for this even though it was their idiotic lender requesting it. We agreed to split the bill ($400) and sent the surveyor out there to do the elevation certificate.
However get this, now the buyer wanted me to lower the contract price by $5,000 because of the requirement to get flood insurance…What???
I quickly proceeded to remind them that we were now three weeks past our initial closing date, I had made every repair they asked me for and all the contingencies in the contract had expired. So, not only would I not lower the price of the house but that they had 24 hours to decide whether or not they wanted the house or I would put the house back on the market and keep the buyers $1,000 earnest money.
Never mind that the house had also appraised for $10,000 over the purchase price!
So yesterday I got the call from the buyers agent saying they would be moving forward with the purchase .
And that brings us to where we are today with this flipping real estate deal. If the lender doesn’t mess anything else up we should be closing next week…knock on wood.
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