Flipping a short sale

[Rob K.]

In the past, anytime I've tried buying a short sale, I waited about two months oply to have the bank say they want more money and kill the deal. For this reason, I have avoided short sales up until now.

I'm in the process of buying one that looks promissing. In the mountain of paperwork that the bank (Wells Fargo) wanted signed is a sentence that states, "Any buyer of the property must agree to not sell the home within 90 calendar days of the closing date."

Do they enforce this? Is it on the deed? Fannie Mae has a 90 day deed restriction that states you cannot sell the house for more than 10% of what you paid within 90 days. In the past, they would waive this if you asked them, but in the last couple years I haven't been able to get it waived.

The house I'm buying doesn't need any work other than paint. It has hardwood floors that are nice. I could rent it out with no problem. I was thinking of replacing the counters with granite and adding stainless appliances and selling for top dollar. I just don't want to have to wait 90 days.

[J Scott]

This is very typical for short sales these days (I have two right now that are actually 120 days). While it's not put on the deed (not a deed restriction), you are committing fraud if you sign the short sale approval with intent to resell in less than 90 days.

I have no idea if they enforce it or not, though I'm guessing it's more of an issue of whether they can find out or not. But, if they're willing to go to any length to try to find out, it's probably because they plan to enforce it.

My suggestion is to just build the hold time into your projections and wait it out...