Can I wholesale a bank short sale?
Tucson, AZ · Member since 2014 · 134 posts · 43 votes
Can I wholesale a bank short sale?
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Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
10yOthers are going to chime in and say"sure you can" and get into transferring interest in LLC's, land trusts, etc. But, while it may be occasionally possible, the odds are very low for a number of reasons, particularly now compared to a few years ago. The most likely result, if a listing agent is dumb enough to actually let you get it under contract, is that 90 days later you won't be able to flip it for more than the bank's approved price, the deal falls apart, and the only thing you've accomplished is tied the seller for 3 months wasting the time they could have sold it to a real buyer, and got them 90 days closer to a foreclosure auction with maybe no time to go through the short sale process again. Find easier deals, and where you'll do less harm.
15 Replies
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes10y
No you can not...and yes banks have a problem with this.
District Invest Group545 Reviews Actually, you can wholesale whatever you can close on- but is that technically wholesaling or just selling a property you own?!? To put a short sale under contract, a bank will want to see POF and will likely prohibit a sales contract with an assignment clause. So to get around this, you have to close with your own funds. You can market it while you are waiting to close and have a second close same day or soon after. I know a large wholesaling company who pits HUD houses under contract all day long - and pay EMD. The use the 30 days prior to closing to market the property. If they find a buyer, they do a double close. If no buyer, they sometimes walk and lose EMD. But you need to show POF for offer to be accepted.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
Others are going to chime in and say"sure you can" and get into transferring interest in LLC's, land trusts, etc. But, while it may be occasionally possible, the odds are very low for a number of reasons, particularly now compared to a few years ago. The most likely result, if a listing agent is dumb enough to actually let you get it under contract, is that 90 days later you won't be able to flip it for more than the bank's approved price, the deal falls apart, and the only thing you've accomplished is tied the seller for 3 months wasting the time they could have sold it to a real buyer, and got them 90 days closer to a foreclosure auction with maybe no time to go through the short sale process again. Find easier deals, and where you'll do less harm.
- Wholesaler · Powder Springs, GA · Member since 2013 · 516 posts · 143 votes10y
I am not an attorney nor do I have any legal advise for, other than to get an attorney of you own.
Form an LLC for 99$ and purchase the property with it. Then sell the LLC to your end buyer.
- Tucson, AZ · Member since 2014 · 134 posts · 43 votes10y
So really it's just not called wholesaling.
It would be buying a property and reselling it to another investor.
The bank took to long to respond and I have my money in other projects and I would pass the deal onto another investor.
- Professional · Columbus, OH · Member since 2015 · 119 posts · 37 votes10y
Originally posted by @Adrien C.:
Actually, you can wholesale whatever you can close on- but is that technically wholesaling or just selling a property you own?!? To put a short sale under contract, a bank will want to see POF and will likely prohibit a sales contract with an assignment clause. So to get around this, you have to close with your own funds. You can market it while you are waiting to close and have a second close same day or soon after. I know a large wholesaling company who pits HUD houses under contract all day long - and pay EMD. The use the 30 days prior to closing to market the property. If they find a buyer, they do a double close. If no buyer, they sometimes walk and lose EMD. But you need to show POF for offer to be accepted.
You are allowed to market a property for sale that you don't own in Indiana?
Originally posted by @Account Closed:
Actually, you can wholesale whatever you can close on- but is that technically wholesaling or just selling a property you own?!? To put a short sale under contract, a bank will want to see POF and will likely prohibit a sales contract with an assignment clause. So to get around this, you have to close with your own funds. You can market it while you are waiting to close and have a second close same day or soon after. I know a large wholesaling company who pits HUD houses under contract all day long - and pay EMD. The use the 30 days prior to closing to market the property. If they find a buyer, they do a double close. If no buyer, they sometimes walk and lose EMD. But you need to show POF for offer to be accepted.
You are allowed to market a property for sale that you don't own in Indiana?
I guess Nick it depends what you consider marketing and maybe I shouldn't have used that term. Is talking with a few of your cash buyers about the property and giving them details marketing? If it's a listed house or HUD house, they can get in on thMany argue that putting down EMD and having the ability and intention to close gives one equitable interest in a property and thus the ability to "market" it. I feel one crosses the line when they put 4-sale signs in the yard, posts on CL, FB, or any other online site, and/or lists on MLS. Calling a few investors isn't marketing.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes10y
Yep, this is why short sales aren't a good fit for some investors. Also, it's why as a listing agent we require inspections up front, and a substantial EM....after 90 days getting an approval, to avoid the "It took too long....I bought something else....I changed my mind....the repairs are more than I thought...etc.". The owner is now just that much closer to an auction date.
- Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes10y
the last two short sales I bought had strictions on selling the house. I had to wait either 60 or 30 days to sell it after I bought. You also cannot assign a short sale.
- Professional · Columbus, OH · Member since 2015 · 119 posts · 37 votes10y
Originally posted by @Adrien C.:
Actually, you can wholesale whatever you can close on- but is that technically wholesaling or just selling a property you own?!? To put a short sale under contract, a bank will want to see POF and will likely prohibit a sales contract with an assignment clause. So to get around this, you have to close with your own funds. You can market it while you are waiting to close and have a second close same day or soon after. I know a large wholesaling company who pits HUD houses under contract all day long - and pay EMD. The use the 30 days prior to closing to market the property. If they find a buyer, they do a double close. If no buyer, they sometimes walk and lose EMD. But you need to show POF for offer to be accepted.
You are allowed to market a property for sale that you don't own in Indiana?
I guess Nick it depends what you consider marketing and maybe I shouldn't have used that term. Is talking with a few of your cash buyers about the property and giving them details marketing? If it's a listed house or HUD house, they can get in on thMany argue that putting down EMD and having the ability and intention to close gives one equitable interest in a property and thus the ability to "market" it. I feel one crosses the line when they put 4-sale signs in the yard, posts on CL, FB, or any other online site, and/or lists on MLS. Calling a few investors isn't marketing.
Really? I advise you to become familair with your State's real estate licensing laws. Ignorance will not be a defensible argument if you are the focus of an investigation.
- Residential Real Estate Broker · Indianapolis, IN · Member since 2010 · 1k+ posts · 557 votes10y
Originally posted by @Adrien C.:
Originally posted by @Account Closed:
Originally posted by @Adrien C.:
Actually, you can wholesale whatever you can close on- but is that technically wholesaling or just selling a property you own?!? To put a short sale under contract, a bank will want to see POF and will likely prohibit a sales contract with an assignment clause. So to get around this, you have to close with your own funds. You can market it while you are waiting to close and have a second close same day or soon after. I know a large wholesaling company who pits HUD houses under contract all day long - and pay EMD. The use the 30 days prior to closing to market the property. If they find a buyer, they do a double close. If no buyer, they sometimes walk and lose EMD. But you need to show POF for offer to be accepted.
You are allowed to market a property for sale that you don't own in Indiana?
I guess Nick it depends what you consider marketing and maybe I shouldn't have used that term. Is talking with a few of your cash buyers about the property and giving them details marketing? If it's a listed house or HUD house, they can get in on thMany argue that putting down EMD and having the ability and intention to close gives one equitable interest in a property and thus the ability to "market" it. I feel one crosses the line when they put 4-sale signs in the yard, posts on CL, FB, or any other online site, and/or lists on MLS. Calling a few investors isn't marketing.
Yes, here in Indiana, one can start advertising immediately upon the accepted contract since you will have equitable control via the earnest money and signed contract.
The HUD training's I've attended even encourage this and are okay with it, social media is fine - as long as there is NO yard sign or other signs placed on the property [you can place them near the property and point buyers to it with the address written on the sign...
- Tucson, AZ · Member since 2014 · 134 posts · 43 votes10y
Wow, someone has forgotten what the Banks have done to the whole country.
I feel like I'm part of the job of cleaning up the mess they created.Is what they did to the whole market legal........I for one think not at all.
- Professional · Columbus, OH · Member since 2015 · 119 posts · 37 votes10y
Originally posted by @Shawn Holsapple:
Originally posted by @Adrien C.:
Originally posted by @Account Closed:
Originally posted by @Adrien C.:
Actually, you can wholesale whatever you can close on- but is that technically wholesaling or just selling a property you own?!? To put a short sale under contract, a bank will want to see POF and will likely prohibit a sales contract with an assignment clause. So to get around this, you have to close with your own funds. You can market it while you are waiting to close and have a second close same day or soon after. I know a large wholesaling company who pits HUD houses under contract all day long - and pay EMD. The use the 30 days prior to closing to market the property. If they find a buyer, they do a double close. If no buyer, they sometimes walk and lose EMD. But you need to show POF for offer to be accepted.
You are allowed to market a property for sale that you don't own in Indiana?
I guess Nick it depends what you consider marketing and maybe I shouldn't have used that term. Is talking with a few of your cash buyers about the property and giving them details marketing? If it's a listed house or HUD house, they can get in on thMany argue that putting down EMD and having the ability and intention to close gives one equitable interest in a property and thus the ability to "market" it. I feel one crosses the line when they put 4-sale signs in the yard, posts on CL, FB, or any other online site, and/or lists on MLS. Calling a few investors isn't marketing.
Yes, here in Indiana, one can start advertising immediately upon the accepted contract since you will have equitable control via the earnest money and signed contract.
The HUD training's I've attended even encourage this and are okay with it, social media is fine - as long as there is NO yard sign or other signs placed on the property [you can place them near the property and point buyers to it with the address written on the sign...
Shawn,
HUD's guidelines do not supersede your State's laws, so many licensees misinterpret this.
And what is "equitable control", please find me a legal definition that will stand up in a hearing and/or court proceeding.
Nick
- Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes10y
Originally posted by @Account Closed:
Originally posted by @Shawn Holsapple:
Originally posted by @Adrien C.:
Originally posted by @Account Closed:
Originally posted by @Adrien C.:
Actually, you can wholesale whatever you can close on- but is that technically wholesaling or just selling a property you own?!? To put a short sale under contract, a bank will want to see POF and will likely prohibit a sales contract with an assignment clause. So to get around this, you have to close with your own funds. You can market it while you are waiting to close and have a second close same day or soon after. I know a large wholesaling company who pits HUD houses under contract all day long - and pay EMD. The use the 30 days prior to closing to market the property. If they find a buyer, they do a double close. If no buyer, they sometimes walk and lose EMD. But you need to show POF for offer to be accepted.
You are allowed to market a property for sale that you don't own in Indiana?
I guess Nick it depends what you consider marketing and maybe I shouldn't have used that term. Is talking with a few of your cash buyers about the property and giving them details marketing? If it's a listed house or HUD house, they can get in on thMany argue that putting down EMD and having the ability and intention to close gives one equitable interest in a property and thus the ability to "market" it. I feel one crosses the line when they put 4-sale signs in the yard, posts on CL, FB, or any other online site, and/or lists on MLS. Calling a few investors isn't marketing.
Yes, here in Indiana, one can start advertising immediately upon the accepted contract since you will have equitable control via the earnest money and signed contract.
The HUD training's I've attended even encourage this and are okay with it, social media is fine - as long as there is NO yard sign or other signs placed on the property [you can place them near the property and point buyers to it with the address written on the sign...
Shawn,
HUD's guidelines do not supersede your State's laws, so many licensees misinterpret this.
And what is "equitable control", please find me a legal definition that will stand up in a hearing and/or court proceeding.
Nick
Actually HUD does supercede some state guidelines like Colorado's law that all houses that sell must have carbon monoxide detectors.
But, I would also argue that HUD does not encourage people to market their homes after they have a contract on them. You can't advertise a different price on Facebook or cragslist before the house is purchased. In fact with HUD it could even be considered a felony since you are dealing with the gov. I am a HUD listing broker. Putting yard signs up anywhere near or on the property advertising it for sale is also not allowed.
@Account Closed you'll have to speak with the people doing it directly. I was just referring info on how to wholesale a short sale and that it's technically not wholesaling because one has to close on the property themselves in order to sell to a cash buyer. You can debate with them the technicalities of what is considered marketing (which btw- you didn't comment on in my last post).
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