House flipping was made popular by some cable tv shows during the boom and its occurring very often today too.  But many buyers are also aware of the flip rule for FHA, where the resale of homes to FHA buyers could not occur until after 90 days. The rule was initially meant to prevent fraud, similar to what Tony Soprano did in the third season of the Sopranos. However, the rule made many of the “flipped” homes nearly unobtainable for a lot of buyers. A rule reversal is scheduled for February 1st (other stipulations will be in place for sure). This should help a lot of buyers compete for some of these flipped homes.

House flipping can really be a socially beneficial exercise. While the process became the Gordon Gekko of boom years and from those cable tv shows, the players today are using their own money to purchase these homes and hire their own crews to rehab them. Many lenders would not finance a purchase of these homes so these individuals are the conduit from the courthouse steps to the end user and there is value added along the way.

Below is a chart depicting the type of financing sold for the primary financing types. You can see that cash and conventional together make up a lot of competition for FHA buyers. Nevertheless, a lot of FHA deals are getting done.


Source: Mlxchange.