Lender Seasoning Requirements
In recent years many lenders have placed title seasoning requirements on loan transactions making it difficult for many investors to legitimately buy properties that are good deals.
The lenders may not want to fund the second part of a double closing because they fear this closing could represent and inflated purchase price. The result has been seasoning requirements where the owner has maintained ownership of the property for a set amount of time; typically 6-12 months.
The seasoning requirement is complete and utter nonsense because property values are reflected in the required appraisals that must be submitted from a lender approved appraiser. Seasoning is a flawed concept and has nothing to do with the property value.
Unfortunately this is no solution to lender seasoning requirements other than working with lenders with more intelligence and practical lending policies. If you are selling a property with a double closing be sure the buyers lender does not have any seasoning issues or your deal could suddenly die when the lender learns the property will not meet seasoning requirements at closing.
To get around seasoning issues you may be able to assign your contract to the buyer for a fee which will keep the seller as the current owner. The major drawback with assignments is you have to ensure your buyer is able to pay your assignment fee without the funds from the escrow.
Assignment Example: You negotiate a short sale for $100,000 and agree to assign your contract to a new buyer for $10,000. Since the new buyer is taking over a $100,000 purchase price the $10,000 must come from their own pocket in most circumstances where lender seasoning would be an issue.
Tip: If you are doing a double closing on a property that requires a short sale it is advisable to find a buyer that does not need to close with conventional financing where seasoning could be an issue.