Property Q&A in 91501>Question Details

Alex, Home Buyer in Los Angeles County, CA

Flipped property with preferred lender

Asked by Alex, Los Angeles County, CA Thu Oct 31, 2013

There is a flipped property in the market which seller is selling in less than 90 days. Also seller has put a condition to use their preferred lender.. Can someone help me(first time buyer) to understand if selling a flipped property with preferred lender is a legal thing? All research I did indicates that preferred lender is NOT legal.

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They cannot make you use their lender however they may have a lender that is willing to finance it in less than 90 days from the flippers purchase which most lenders won't do. It's not illegal to ask you to cross qualify with their lender but if your lender can do it then they can't force you to use their lender. You could ask if there are any incentives to using their lender.
1 vote Thank Flag Link Thu Oct 31, 2013
What half-baked research did you do?

Yes, it's legal. 100% legal.

The seller cannot require you to use the recommended lender. But he sure as heck can identify a preferred lender. As already noted, the investor probably has worked with the lender before and knows that the lender will finance the transaction (assuming you qualify). If you do something stupid (yup, stupid) like finding an online Internet lender, be prepared for the transaction to collapse.
0 votes Thank Flag Link Wed Nov 6, 2013
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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You may choose the lender of your choice. There are many banks that don't do flips less than 90 days but there are many that do. It will depend on your credit profile, debt to income ratios, fico scores and how much you want to invest into the down payment and closing costs.

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0 votes Thank Flag Link Tue Nov 5, 2013
As already stated below, you are not obligated to use their lender. Often you are asked to cross qualify with their lender jus for reassurance you're qualified.. Please feel free to contact me with the property if you'd like, I'd be happy to look at the exact language in private remarks. If you are using a buyers agent, you should be getting this info from him/her.
Best,
Susan Bo'ur
Realtor Coldwell Banker
Susan@SusanBour.com
0 votes Thank Flag Link Thu Oct 31, 2013
Hi Alex,
The seller can counter hat they want you to use their preferred lender. Many flippers want their terms and conditions and if you do not agree, then they do not have to accept your offer.

There was a great post in Trulia on Flipping in Ca written by Lacey Fischer: Read this and make sure you do what is right for you: As this article states: "A sales transaction of any kind is a convergence of mutual interests. Despite what people believe, there cannot be one party in the transaction that has all the "power". Each party must benefit somehow, and each party must bear a certain amount of risk. For one party to ask the other party to bear all of the risk is (in my opinion) irresponsible and makes for bad business. Telling the buyer through your negotiations essentially "take this house on my terms or buy something else" is both arrogant and suspect. It fully makes me question the integrity of the seller but mostly the quality of the rehab done on the home.

If you are a buyer and you get a counter offer/addendum from a flipper, make sure you read it CAREFULLY and are very comfortable agreeing to their terms. Everyone starts a transaction thinking it is going to be roses and sunshine, but anything can happen, so PROTECT YOUR INTERESTS!

Here is the link to the full post: http://www.trulia.com/blog/livingmodesto/2012/02/don_t_get_f…

Hope this helps and if we can be of further service please let us know.
Thanks
Norma and Kyle
The Achievers Group
REMAX Town Center
800-525-5157 ext 0
0 votes Thank Flag Link Thu Oct 31, 2013
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