Underwriting conditions on a flip...ugh.

[Billie Miller]

Hello all,

We're set to sell a townhouse flip within a week and the underwriter is making it difficult. We bought this property as a wholesale, it was a double closing. So public records show that the property was sold twice on the same day, first for $107,000 and second for $120,000 (our purchase).

We listed the property at $200,000 and are U/C for $210,000. The contract is FHA, with a $10,000 cash over appraisal clause. We have owned it for about 3.5 months now.

The underwriter is all worked up because he thinks the property appreciated over $100K in 3 months and is questioning that. ($210,000-107,000). 

I just emailed the lender with the comps we used to justify our list price (of which there are several) and explained that we bought the property for below market value (because it was pre-forclosure, we paid cash, no inspection/appraisal/financing contingencies). I also gave a detailed list of the improvements (both to the lender and the appraiser) we made to it, showing why our property is better than the other comps, but listed at the same price.

Has anyone else encountered this? I don't really see why our original purchase price is the underwriter's business, considering it's priced according to comps.

Does anyone have any suggestions as to what other information (beyond explaining the difference between purchase price and market value lol) I can provide the lender and the underwriter to help this along?

Thanks!