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Forums » HUD, VA, and Tax Sales » Wholesaling Hud Houses

Wholesaling Hud Houses

16 posts by 12 users

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Real Estate Investor


I've bought a hud home before, but never wholesaled them.

What is the whole deal of setting up a Non for profit to wholesale Hud homes?

Also, are there any challenges to wholesaling them as opposed to conventional wholesaling?



Rehabber · Chandler, Arizona


No challenges that I know of but why the non profit? Sounds like a way to be able to bid first before going to investors. Are wholesalers doing this?


Small_rezamp_buscard_whiteJustin S., Rezamp, LLC
E-Mail: [email protected]
Telephone: 4806780446
Website: http://www.rezamp.com
Comp like the MLS. Real-time feed and instant notifications of deals. Rezamp.com



I've done plenty of these. You need to add your buyer onto the contracts which your realtor should know, then you will quit claim him the deed at closing. Very simple. Contact me if you need me to walk you through.



Real Estate Investor · Upland, California


Dan - getting purchase advantage by being a nonprofit subjects you to a lot of restrictions. There is a lot of info on this on the HUD website.



Real Estate Investor · portsmouth, Virginia


Originally posted by Greg P.:
I've done plenty of these. You need to add your buyer onto the contracts which your realtor should know, then you will quit claim him the deed at closing. Very simple. Contact me if you need me to walk you through.

Greg I would like a walk through of how you do these also. I see some opportunity in HUD homes and would like to know more.



Real Estate Investor · Atlanta, Georgia


Greg... I would also like a quick run through on this... thanks!



SFR Investor · Los Angeles, California


I would like a walk through of this as well.




Sure. Once you have it under contract after the bid is accepted, start finding your buyer. Once you have your buyer, ask your realtor to add your partner a.k.a buyer onto the contract (very simple amendment). Explain to your buyer what is going on and then you and your buyer write a separate purchase agreement stating at closing you will be quit claiming him the deed and get earnest money. Draft up the quit claim deed (use your state's), then bring the document to closing. Have the closer notarize it and have the buyer write you a check. Super easy after you do one. I'd also recommend using a HUD agent (someone experienced) and he will explain to you how to do this. My realtor was the one who helped me throughout the whole process. Good luck.



Real Estate Agent · Yardley, Pennsylvania


Hey Greg,
When you say you are quitclaiming him the deed, how has that worked for you? I only ask because I'm set to close on one next week and we were planning on doing a separate close between the end buyer and myself, therefore having to pay additional transfer tax. Can you help me out?




Why the end buyer wouldn't want to do this.
A quit claim deed doesn't protect the end buyer from whatever you might of done to cloud the title by owning it for a few seconds. If you screw up the timing and don't collect the quit claim deed at the table the investor paid for the entire house and owns 50% of it. Yikes!

Why the wholesaler doesn't want to do this.
Once you add on the new buyer to the contract with hud, god help you if that buyer ends up changing his mind. He is on the contract with you, with equal rights and it is hard to remove/add another person. I also see no legal way to collect your fee unless it's when you hand over the quit claim deed. I'd only accept cash if i were you at that point since nobody is protecting you (title company won't touch it).

I've done one of these before with a friend. I've done maybe a dozen same day flips with 2 closings. Costly, but safer for all.



Real Estate Investor · Audubon, Pennsylvania


Originally posted by @Drew Dickinson:
Hey Greg,
When you say you are quitclaiming him the deed, how has that worked for you? I only ask because I'm set to close on one next week and we were planning on doing a separate close between the end buyer and myself, therefore having to pay additional transfer tax. Can you help me out?

Drew Dickinson - in Pennsylvania, you will incur that additional transfer tax - unless the transfer is among the types that qualify for some exemption. The county recorder will have a form to be completed that is used to state if there is an eligible exemption and to determine the amount of the transfer tax - and when a nominal amount is used ($1 or $10 for example), then they use the current assessed amount multiplied by a leveling factor (that the state has for each county), and that amount is what they will use for the transfer amount and base the transfer tax due on that. So if your separate closing will be for a lower amount than what the state's formula will use for the transfer tax, then you just might be better off with a separate closing.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Real Estate Agent · Yardley, Pennsylvania


Thanks guys,
A seperate closing if probably what we'll have to do. Steve, you don't happen to know what formula Bucks County, PA uses to calculate this do you? I also hear what Greg is saying. Does anyone have any kind of assignment contract for this situation? Ie: "me and the end buyer agree to have a second closing on the property immediately after the first close. End buyer agrees to pay X and I agree to be removed from title in exchange for that X." Any help would be greatly appreciated. Thanks.



Real Estate Investor · Audubon, Pennsylvania


I posted a link for how to calculate here, it has the link to the state's table too:
http://www.biggerpockets.com/forums/51/topics/72773-allegheny-county-assessment-appeal

Since you are doing two closings, it is two separate agreements of sale, not one agreement of sale and an assignment agreement.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Real Estate Agent · Yardley, Pennsylvania


Still looking for advice; I'm getting the feeling that is a mess.
We (my wife) got a HUD deal under contract that we were gonna flip ourselves; we got it OUTSIDE of the exclusive owner occ period. We decided to buy something else to live in and wanted to flip this to someone for some money. I don't have the cash to close and no transactional funding.

So we found a guy who really wants the place and we added him to the HUD contract (which was easy). Now he wants to make sure that there are no deed restrictions and also how the logistics of this work out. Any advice?

I know this could have been done better but this is my first wholesale and at this point I just really want to sell it to him and he really wants to buy it. We have to stay on the contract or else HUD just puts the place back on the market and we lose our deposit and extension money. At least that's what I've been told.

What is the best way to do this? I have heard from people here that there has to be two closings and two transfer taxes paid which is fine. This is supposed to close ASAP. Can't we just sign an agreement ahead of time stating that we will be removed from title in exchange for the fee that we have already agreed to? Any help would be great.



Real Estate Investor · Ellicott City, Maryland


If he agrees to allow you to just quit claim the property to him for a fee, then you can definitely do it that way. He has to trust that you'll actually go through with the quit claim, as he's taking a risk that you won't do it and he'll have to take you to court to enforce whatever contract you have with him.

Assuming the property is bought outside the owner occupied time period, there should be no deed restriction on the property.


Small_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Telephone: 770-906-6358
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


· Mokena, Illinois


Can write in a partner (end buyer) and quit claim the deed to him on Fannie mae properties as well. Example "homepath" properties?





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