Are there any restrictions to abide by with flipping houses?

Property or house “flipping” is an increasingly popular practice. House flipping is when a person purchases a home below the market price, makes the needed repairs and sells the house closer to its market price for a significant profit. Though the practice is generally legal, house flipping fraud is on the rise. House flipping becomes fraudulent and illegal when the “flipper” conspires with an appraiser or mortgage lender to create a fraudulent appraisal or loan document in order to unfairly raise the price on the house and receive a higher loan. Illegal house flipping breaks various laws and could be prosecuted under mail fraud, wire fraud, or grand theft. Each of these offenses have serious penalties, if the flipper is convicted of a felony they should face 2-3 years in state prison with a $10,000 fine; if the fraud is considered a misdemeanor the flipper should face 1 year in county jail with a $1,000 fine. An additional 1-4 years may be added to the sentence if the guilty party has taken more than $65,000 from the lender.

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