House-flipping—the game of buy, fix and sell that was all the rage as the Great Recession wound down—slowed this year, but it’s about to pick up again as more foreclosures come through the real estate pipeline. That’s a good thing for first-time homebuyers, who tend to like the move-in-ready nature of freshly rehabbed flip properties.
For obvious reasons, lenders became wary of flips during the housing collapse. As a result, they put certain safeguards in place. One safeguard is the two-appraisal requirement on a deal, especially if the home is being sold within 90 days of its last purchase. But in recent years, flippers shied away from buyers pre-approved by lenders that required two appraisals. And in many cases, the flippers were fortunate to find plenty of cash buyers to fill the void.
But now cash sales have slowed. So flippers welcome the news that the two-appraisal requirement is slowly going away. Lenders are now more likely to instead demand things like a higher credit score, several months of mortgage in savings or home inspections from the buyer, says Eric Chavez, homeownership manager of Housing for Nevada Inc., a nonprofit housing counseling agency. As long as a home is priced close to area-comparable sales, a second appraisal requirement is far less likely.
“The credit markets are really loosening up,” Chavez says. “It doesn’t surprise me that we’re seeing these types of things.”