How Long Should You Hold A Property Before “Flipping” It!

Statistics show that the “sweet spot” for flipping a property (not a human being) is three to six months.

From Real Estate Journal

Question: I recently bought a home priced below market. I tried to sell it right after closing escrow. I received an offer the next day and we opened escrow right away. After two weeks, I was contacted by my broker telling me that I couldn’t sell my house right away and that I have to wait three months before putting it back into the market. Is this accurate? The escrow was cancelled and I need to know if my broker is right.

Answer: As far as I know, there is no law or regulation that prevents anyone from purchasing a house one day and selling it the next, a process known as “flipping.”

Some builders have clauses in their sales contracts that prohibit buyers from putting their houses back on the market for a period of time after closing — usually a year. Whether such clauses are enforceable has yet to be proven.

If you bought a new house, your agent may have been correct, or at least prevented you from winding up in court to test your rights. But if you purchased an existing home, I’d love to hear the agent’s explanation as to why you couldn’t resell right away.

That said, a new research study by Christopher Cagan, an unusually glib economist who is director of research at First American Real Estate Solutions, indicates your agent may have been doing you a favor. As it turns out, the “sweet spot” for flippers is between three and six months. Hold a house any shorter or longer than that and you won’t do nearly as well.

Of course, we’re not talking about scam artists who use false information to buy a house. Rather, we’re talking about savvy investors who purchase distressed or undervalued properties, raise their value by making repairs or even remodeling or simply taking advantage of a hot and getting-hotter housing market.