MAKING OFFER ON HUD PROPERTY FOR ASSIGNMENT FEE

17 Replies

I recently looked @ a hud home asking price 70k with ARV about 140k I have a buyer interested in the property can I do an Assignment? If put under contract with an acceptable offer???

Yes. Make the offer in the name of an LLC...a brand new one. Then, sell the LLC to this interested investor for the price of your assignment fee. The agreement to purchase would be between the LLC and HUD, not you and HUD, so the new owner/member of the LLC would just close in the name of the LLC.

We do this as standard procedure on all of our HUD buys.

Joe V

You'll need a POF for the LLC, or at least in your personal name, if you're the sole member.

Originally posted by @Wayne Brooks :

You'll need a POF for the LLC, or at least in your personal name, if you're the sole member.

You'll also need the EIN for the LLC,

Originally posted by @Joe Villeneuve :

Yes. Make the offer in the name of an LLC...a brand new one. Then, sell the LLC to this interested investor for the price of your assignment fee. The agreement to purchase would be between the LLC and HUD, not you and HUD, so the new owner/member of the LLC would just close in the name of the LLC.

We do this as standard procedure on all of our HUD buys.

Joe V

Thanks Joe for your response,once I make the offer and the offer say is accepted,then I have a contract,sell my LLC to my investor for my assignment fee that means I'm out of the picture before closing or after closing? ( Is my assignment fee based on the less offer vs the 70k)

You sell the LLC before you close, otherwise you're doing a dbl closing. By selling the LLC first, you only do the one closing...which is done by the new LLC owner who is just executing the original accepted PA.

If the agreed on price in the PA is 70,000, you should get paid:

1 - Whatever your assignment/wholesale fee is (this is now called the price of the LLC)

2 - Reimbursement for your EMD money you put up (this will get credited at the time of closing for the buyer, just like your EMD would have been. All this is doing is substituting their money for your money for the EMD.

You don't get the 70k...the seller does, from the LLC...which is now the responsibility of the new LLC owner.

@Joe Villeneuve Does HUD require the operating agreement/managing members of the LLC documents?

Originally posted by @Wayne Brooks :

@Joe Villeneuve Does HUD require the operating agreement/managing members of the LLC documents?

Yes. This doc, like all the LLC docs, will be a template you just change addresses, dates and amounts.

this is very interesting @Joe Villeneuve could you use the investors POF ?

The POF, bank account cash, has to be in the name of the buying entity.

Originally posted by @Wayne Brooks :

The POF, bank account cash, has to be in the name of the buying entity.

...orm a letter from the entity holding the POF stating it's intended use for the property in question.

Joe V

.....which would be a preapproval from a lender, not a cash offer.

I understand you need to get all the paperwork in within 48 hrs once HUD accepts the PA otherwise (so I'm told) you'll find it difficult to get your Earnest Money back?

Russ Swan

Originally posted by @Wayne Brooks :

.....which would be a preapproval from a lender, not a cash offer.

 Not necessarily.  It could be from a partner...or future partner. 

Originally posted by @Terry Royce :

@Joe Villeneuve - You are getting the EIN Prior to closing?

 Yes

@Joe Villeneuve  - But why wouldn't you just let the new buyer get the EIN, after they close?

Hud, banks, etc...require that the LLC already have their EIN #