Homeowner · Longview, TX · Member since 2013 · 131 posts · 17 votes
What are the rules regarding wholesaling a HUD home? Ive read several blogs but still confused. If they accept whats my timeframe? Are there specific rules in different States? Im in Texas.
Brighton, MI · Member since 2013 · 29 posts · 4 votes
13y
I have been researching it a little myself and I am new and by no means an expert. I believe that once they accept your bid you must send them earnest money. I believe it is $500 if sale price is under $15,000, and $1000 if its over $15,000. You then have 45 days to close the deal. The property cannot be assigned only sold. Also as a side be careful when bidding on houses because not all houses are open to investor bids, so make sure to filter your search for investor property if that is what you want.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
13y
You can buy in an LLC, then assign that interest after, but Not during the owner occ. period.
You can't assign HUD contracts, because your HUD contract says you can't.
Homeowner · Longview, TX · Member since 2013 · 131 posts · 17 votes
13y
I read in one persons blog that HUD has suspended the owner occupied period. He listed the source doc from HUD's site. Could this be true? Mark Ferguson
Investor · Lake Charles, LA · Member since 2013 · 113 posts · 36 votes
13y
I am about to close on my first one. They have a bottom number they will accept from you. We started out offering $85k and they accepted. They canceled our contract 4 times because of things like signatures were missing on a single page or the llc name didn't perfectly match the ein name with fed. It about drove our poor realtor crazy. Lol, every time they cancelled it on us we made them pay us for our time and lowered the bid $1000. And they always took it until they finally just told us what their low number was. It took like 4 weeks to finally get a final contract but we saved $4k in the process! Don't be intimidated by them, just have a good realtor who has the patients to read all the rules and will be willing to stick with the process. You do usually have to wait 30 days after it goes in the market to make an offer as an investor, but you can also make your offer a back up if they don't ever get the price they start off asking for they lower their price and you may end up with the property. Especially if its a beater. Which is good for us! Good luck.
Ps I have tried to figure a way to get around the 30 day rule and buy it as a owner occupant, but it's not worth it. They got that all figured out and it could mean bad news if you ask grandma to buy it for you, lol !!
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
13y
Mark Ferguson
The different asset managers have some different rules, even on the deposit.
One wants $500, another wants 1%.
One asset manager wants the deposit to go to the listed real estate office, and another wants the deposit to go to the asset manager.
One asset manager requires the listing agent to attend settlement, another does not.
One asset manager requires all investor deals to settle in 30 days, owner occupants in 45 days, while another will allow investor financed deals to settle in 45 days.
One asset manager requires deposits to be cashiers checks only, another asset manager will accept broker escrow checks.
All of the ones that I have dealt with require the contract in 48 hours after acceptance, but don't count Sat, Sun or holidays.
Usually for the first 30 days the bidding is only open to owner occupants.
I haven't seen this recently but HUD used to given owner occupants preference even after the 30 days, and I have seen where they have accepted owner occupied financed offer for a much lower price than an investor all cash offer at a higher price.
Been working HUD's since 1986, so we've seen quite a few different rules changes over the years.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
13y
Hi David, the asset managers do have different rules. Matt Martin used to require 1% earnest money, but they switched to $500/$1000 last year. HUD wants to try and get the companies to have similar policies.
HUD started the buyer select program where buyer can select their own title company to do the whole transaction. It is only available in some states and with that program the earnest money goes to the listing agent as well as the contract. Then listing agent sends it all in to HUD.
HUD gives no preference to owner occupants if it is in the period where investors can bid. HUD only cares about net price to them and gives no preference to cash or financed either.
FHA insured properties have owner occ period of 30 days. FHA uninsured have owner occ period of 5 days(after the lottery period where only government and non Profits can bid).
You are right about asset management companies having different rules on closing dates.
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
13y
Mark Ferguson
At a HUD that I just did a couple of weeks ago, haven't settled yet on a 30 day settlement, the deposit check went directly to the asset manager. but another one that I did about 6 weeks ago the check went to the listing agency. So even though PA. is a pick your own settlement state, they still do the deposit 2 different way.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
I've bought a few HUDs. The only one that I wholesaled - I closed on it, then sold it. In my area, you can pick your own title company. Pick one that will do a simultaneous double-close using your end-buyers money.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
13y
You can pick your own title company for the buyers side in any State. HUD's new buyer select program actually allows the buyer to pick the title company for the entire transaction including the sellers(Huds) side as well.
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
13y
Originally posted by Bryan Lynchard:
I've bought a few HUDs. The only one that I wholesaled - I closed on it, then sold it. In my area, you can pick your own title company. Pick one that will do a simultaneous double-close using your end-buyers money.
Bryan, please clarify. I think you're saying that you did a wholesale where you closed the A-B with your own funds, fair enough, happens all the time.
You also said that it CAN be done in your area with the end buyer's funds. However, to get the deal on the front end, you would have had to submit POF in YOUR name, correct? (This is assuming that the silly transactional lender POFs from the internet don't fly anymore.)
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
On the one that I wholesaled, I bought it out-right with my own money. Then later wholesaled/sold it to someone else. No HUD rules concerning that at all. Also, at least in TN, HUD will let the buyer pick their own closing agent, so a wholesaler could theoretically do a simultaneous double-close using the end-buyers funds. Not sure how to handle the POF letter.
Have any of the Asset Managers given y'all any directives regarding the marketing of a HUD property while under contract and before closing? This used to be a big no-no but I see more and more of it these days
Have any of the Asset Managers given y'all any directives regarding the marketing of a HUD property while under contract and before closing? This used to be a big no-no but I see more and more of it these days
You are not supposed to market any HUD home before it is purchased.
Hallandale Beach, FL · Member since 2014 · 82 posts · 12 votes
11y
@Mark Ferguson@Wayne Brooks@David Krulac Hi BP community...I am just starting to research HUD. Am I right in assuming that I can only submit a bid through a realestate broker?