What do you think about Short Sale Flippers?

Remember about 3-5 years ago when flipping houses was the rage? Realtors, Investors, Investor Want Be's and every Tom Dick and Harry jumped in on the band wagon...everyone was making money including Realtors, Lenders and Investors. All you did was tie up a property then sell (flip) it a few weeks or months later for a nice quick profit. For the most part everyone was loving it...the Realtors, the lenders and of course the investors.

Fast forward to NOW...we are in an upside down real estate market, lenders are doing everything they can to unload upside down properties and get them off their books...they do not want to own real estate. Now we have a new breed of "flipper"...the short sale flipper. In a nut shell they get the owner of the property to transfer the property into a Trust owned by the investor, now the investor has control. His goal now is to now beat up the seller (who in a short sale is the lender and wants to unload the property). Once he gets a price from the lender, he begins to seek out his own buyer for the property and will make a profit on the difference of what the lender sold to him for and what he sells it to a real buyer for...that is his profit...the margin.

Now the investor, may use what ever means he chooses to try to unload the property a quickly as possible. This can be done by hiring a real estate agent to list the property or by advertising via newspapers, the Internet, throw away signs etc.

Obviously the investor never plans to own the property and when it comes time to close on the property he will be doing what is called a "flip at the table"...I will not get into trying to explain this but essentially he will buy the property from the lender as a short sale (owner really has no say in the sale at this point) and (flip) sell it to his new buyer right at the closing table and he will pocket the difference.

So tell me what is your opinion of the new investor flipping strategy? It is not really new, investors have been doing this for years, it is just now getting out in the open with all the short sales.

Is it legal or not? If not, why?

Have a great day,

Larry Fleckinger

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