Real Estate Education Blog

Blogs Lynn's Blog Real Estate Flipping vs. Flopping

Posted Nov 15, 2010 10:14 am (10 years ago)

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It was just a few years ago when investors were buying homes to turn around and sell at a profit called "flipping."  Today, we are seeing investors persuading lenders to agree to a short sale, buying a house for less than what the lender is owed, but the investor has another buyer lined up who is willing to pay more.  This is known as "flopping" and is under the radar as regulators look to see if it is legal.  Some attorneys say that flopping is legal with full disclosure, while other short sale experts and lenders say that it is not.  Arizona Real Estate Commissioner, Judy Lowe, as quoted in the Arizona Republic says " Short Sale flopping is one of our real estate industry's biggest issues right now.  We are all looking at the legality and ethics of these deals."  Homes listed for short sale are at a record high in metro Phoenix, so the potential for more flops is significant.  Flops can drive down sales prices, and cost lenders money, that ultimately the taxpayers may have to cover on mortgages that are government-backed.