First is that flipping homes is in no way illegal.  The only time that it is, is when the seller has a buyer for a higher price and doesn’t disclose it.  Of course there are always other ways to make it illegal, but the simple act of buying a home, then selling it for more money is not illegal.

Banks are trying to force buyers to not flip the home they are buying.  Banks are:

banks are requiring everyone involved in a transaction, from the real estate agent to the mortgage broker, to sign affidavits swearing they have aren’t in the flipping business with anyone else involved in the sale.  Source

Of course they are doing this at the same time as they are jacking buyers around, not processing short sales for 6 months or more, and demanding buyers to use them as the lender.  Effectively they are forcing people to buy all cash, and who has the cash?  Investors of course.

Then there is complaints that flipping drives up prices.  How can that be?  Didn’t the new and improved lending rules make that impossible by making the appraiser report to the bank not the borrower?  Oh, and while they are at it, the banks cut the fees to the appraisers who now outsource as much of the work as they can.  Can you say ‘super accurate Zillow based appraisals?’

What about the ‘added value’ issue?  Part of the complaint is that flipping homes doesn’t add any value.  Two thoughts here.  One, is that I have yet to see a house get flipped that didn’t get at least a minimum of cleanup and repackaging done to it.  That is added value.  Second is that by screwing around with buyers like they have, the banks have created a situation where a property is more valuable simply because it is not a short sale or REO! 

Buyers are sick of the games the banks are playing and are paying more for properties that won’t have to have bank approval to sell.  This of course drops the price of bank owned ones even further.  As I see it, simply having the cash and patience to fight with a bank for 6 months to close the sale of a home is added value enough to warrant a flip.

Enough ranting from me on the banks and how they are screwing up the market and blaming it on everyone else.  Now that you know my opinion on this, let me know what yours is.  Are the banks to blame, or are they being hurt by dirty real estate investors that are flipping properties?