Wholesaling to a buyer using a 203k

10 Replies

Are there any wholesalers out there who've dealt with buyers using a 203k loan?  Was it excessively difficult or time consuming?

Not likely since they couldn't finance your fee, or it be on the HUD, and they'd have to buy directly from the current owner.

In my experience there is no wholesaling to an end buyer getting any FHA loan. Unless the contract can be written between the seller and the end buyer. An assignment will cause a problem because the underwriters need the seller to be the seller and the buyer to be the buyer in the purchase agreement. Double closes won't usually work because of seasoning, and again, because the seller needs to be the seller---not someone in the middle.

You could close first with your own or borrowed funds, but even then you'll run into seasoning issues with an FHA end buyer.

I know some wholesalers are getting these done, but they are managing to get the contract written between the seller and end buyer, and are collecting their fees outside of escrow.  Or with junior liens recorded against the seller's property.  All of which paints a picture of brokering without a license, even if you aren't.

Maybe some savvy wholesalers can chime in on this:  Account Closed Ever sell to end buyer getting an FHA loan? If so, how?

@Wayne brooks Thanks for the reply.  I'm looking to 203k, and I am trying to get an idea if talking to a wholesaler is even an option, and if the process was worth it for both parties.  I understand the two niches may just be generally incompatible.  Paying a cash fee, depending on what it was, in order to find the right deal could make sense for me.

There is a "grey" area I would call it on this. 

You are a perfect candidate for a deal that is too tight (not enough margin) for a rehabber to take on. Why? Because your using someone else's money (the banks) and have a long term hold business model. 

But... you will not be able to pay a wholesale fee within the escrow on the deal you buy. So you'll have to pay them outside of escrow, either using a third party or on a handshake, however you two can decide. I've sold a deal to a buyer with a loan, we used an outside escrow and it worked fine. 

Here is the catch, you are the lowest on the totem pole because FHA loans and especially 203K loans have a high propensity of falling out. So... you'll probably get the call after everyone else has already passed on it.

Final catch, the seller cannot be in a huge rush, AND has to be okay with the deal going to a "non cash" buyer. 

So.. many variables, yes it can be done. I did this myself to buy my own fourplex so I know it can be done. I just didn't wholesale it but besides that I did this exactly. 

@k. Marie poe Thank you for the clarification. I can see why this isn't commonplace. HUD and MLS have been slim pickings for what/where I'm looking, so my options are drive for dollars and seek wholesalers. It's sounding like I might spend just as much time finding a wholesaler who can help as doing the prospecting myself haha.

A little OT, but this is a very important point/change:

You could close first with your own or borrowed funds, but even then you'll run into seasoning issues with an FHA end buyer.

This is happening again (it looks like) starting in January. 

2003 - 2009 there were restrictions in place against initiating an FHA loan on a property that the seller had not held for at least 90 days. A waiver was first put in place in 2010 and has been renewed each year since then, allowing buyers to buy "flips" using FHA financing. It is my understanding that the waiver will not be renewed this year.


You can go over the mountain, around the mountain, or use the tunnel right through middle of the mountain to get your check on the other side. Which do you choose?

I don't wholesale to anyone who doesn't have cash in the bank or a hard money lender lined up who can close within 10 days or less. Any other buyer presents way too many obstacles to get to my check on the other side of the mountain and there's nothing like the smell of an easily obtained, fresh escrow check in the morning.

What you might be able to do is find a wholesaler willing to close on the deal and then sell it to you at a slightly higher price to warrant the cost of closing and holding while you obtain your loan. I personally would never do this with someone I didn't already have an established relationship with. I might, just maybe, do it on a deal I am thinking of rehabbing and if someone in this position made me an offer to buy it in xx number of days, but again, we have my holding costs accumulating with I'm not able to start any rehab hoping your loan goes through. These aren't situations I want to put my business in.

Another option is.. an option. I've tied up property on options, then sold them to even retail buyers and had my optionor agree to sell directly to my retail buyer with me being paid on the HUD as a 'title claim' fee. A lender will typically not have a problem with that and I've sold to FHA buyers in this matter before.

@tim g.  Thank you for mapping it out for me.  That is exactly what I needed.  The fact that you've done this yourself is very cool too.  You guys are the best! Thanks!!

@aaron Mazzrillo I completely understand I am the "over the mountain" scenario, but I figure if I get in touch with my local wholesalers and have a plan to make it work, I am okay with being their option #10 of 10.  By the way, thanks for more creative ways to make this type of deal happen.  I am so happy I found BP.  Such a great community.

@Aaron Mazzrillo Thank you for the response!

The clarify on the "option" route: are you saying that you wholesaled to a FHA buyer by cutting yourself out (allowing the contract to be between owner and buyer) but put an option / "title claim" fee on the property?

What does the process look like step by step to do this? Would you be putting a lien on the property for your cut?

Also, you mentioned non cash buyers present to many obstacles but that you have also sold to FHA buyers using options. Why did you decide to sell to FHA buyers, don't they still present a lot of obstacles? What was your closing time when working with the FHA buyers -- still 90 days?

Thanks in advance for your help. I am currently trying to figure out a way to allow wholesaler and lender to let me finance a deal with 203k loan.

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