Jammed flippers

Developers tactics to limit new construction flipping

A recent trend that is becoming popular with new home developers is this use of deed restrictions to limit investor flipping.

Tactics adopted by developers include restricting resales for a year or until the community is completed and also mandatory profit sharing with the developer if the property is flipped.

Here in SW Florida, I have seen several different deed restrictions to discourage investor flipping including a five percent penalty payable to the developer if the property is sold within a year.

Also popping up on many new construction contracts is a clause that prohibits the assignment of the contract. This type of clause forces the investor to close on the property and incur closing costs that previously could have been avoided by assigning the contract.

Housing.com recently issued a report on housing markets ripe for a price correction and named Ft. Myers; along with Colorado Springs; Denver; San Francisco and Sarasota as "worrisome" markets. Additionally, Boston; Las Vegas and Reno were cited as as the metro areas "most susceptible to a severe house price correction."

Developer tactics to avoid housing bust [The Christian Science Monitor]

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