What Is Illegal House Flipping?

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While house flipping is not illegal, some investors use fraudulent appraisals and title work to flip houses illegally. Ensure that a flipped house is an an illegal flip by checking the title report with help from a mortgage specialist in this free video on flipping houses.

Part of the Video Series: Real Estate Financing
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Video Transcript

Hi, my name is Stetson Lowe, and in this clip, we're going to be talking about illegal house flipping. Flipping a house in and of itself is not illegal. You may have seen TV shows on TV that talk about flip this house or flipping homes for a profit. That's not illegal, but the tendency to buy a home and quickly sell it at a...at a major profit does tend to attract fraudulent investors who may use items like a fraudulent appraisal, fraudulent title work, and even obtain fraudulent mortgages that way. In this case, it would make flipping of the home illegal. But the good, old fashioned buy a beater and put some elbow grease into it, fix it up, and sell it is not illegal. It's just the people who don't put the time in or trying to stretch more money out of it than it's really worth who bring in the illegal factors of...illegal appraisals and things like that that makes home flipping illegal. In order to ensure that you haven't bought or you're not buying an illegal house flip, you may want to check the title report and see how long the owners have actually owned the home. If it's been less than six months, you may want to check for receipts and ask for receipts to see what actually they have done for the property since the time they bought the home to legitimize what they're asking for the home. Also, just have a good appraisal done. Don't ever use the seller's appraiser or appraisal from the past. Make sure you hire a unaffiliated third-party appraiser to go and do a really non-biased appraisal of the property and give you a fair value of what it's worth.

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