ANNOUNCER: I’m with Brian Phillips from Cohen Highley Lawyers. If someone wants to flip a home before taking possession, what should they know?
BRIAN: Our overheated real estate market has made it possible for buyers to enter into a new home construction contract with significant confidence that they can resell the contract to an alternate buyer before closing date for a profit.
ANNOUNCER: And the risk?
BRIAN: The original buyer is liable to the builder under the terms of the original contract. If the new buyer cannot close with a builder, the deposit could be lost and they can be liable for any damages suffered by the builder due to the default.
ANNOUNCER: So, your suggestion for would-be flippers?
BRIAN: Flippers must be prepared to close at the last minute if their flippy buyer cannot. This can be difficult unless the flipper is able to purchase for cash. Even if the builder resells for a higher price, the flipper can lose the purchase deposit.
