Wholesaler · Columbus, OH · Member since 2016 · 62 posts · 8 votes
I have a question and hope to get a solid answer from a season invester. I'm Alli college kid with ambition to succeed in the RE and build my portfolio with renntal property's once I make few successful wholesale deals, with that being said my question is can you wholesale a hud homes? Can you put it under contract and sell that contract to an investor?
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
10y
HUD contracts cannot be assigned. Hud requires a tax id#(for and LLC or Corp) or SS# if individual and the property must be closed under that entity or name
HUD does not allow their contract to altered in any way so there are no clauses that can be added
HUD does require proof of funds or pre-qual letter along with proof of the entity before the contract will be ratified. Earnest money is $500 for under $50,000 and $1000 above $50000 and is nion-refundable for investors that fail to close
Double closing, Transactional funding and selling the entity are viable wholesaling options but I would strongly urge someone new to the business to partner with an experienced investor as all will require understanding and explanation to your end buyer
As of 2+ years ago, there are no HUD appointed closing companies. The buyer selects the closing company
@Alli Issa The Realtor that says he is providing you info of properties before they go to auction is just plain wrong. All HUD properties go through an owner occupant period before they are available to investors. HUD is not an auction at all but an opportunity to place an offer/bid on a daily basis.
Lender · St. Louis, MO · Member since 2009 · 348 posts · 164 votes
10y
Transactional Funding provides 100% of the purchase price and closing costs. There are two transactions: the A-B and the B-C. A=The Seller (HUD), B=The Buyer (You), and C=The End Buyer. You use Transactional Funding to close on the A-B transaction. Then you pay back that loan + fees on the B-C closing. The amount left over is your profit.
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
10y
As Joe said, yes you can. However, you must have written permission from the HUD trustee (not the realtor listing the property) to assign the contract. You also can only wholesale a HUD property that was an Extended Listing. Exclusive Listings are reserved for owner occupants.
Wholesaler · Columbus, OH · Member since 2016 · 62 posts · 8 votes
10y
Great info I'm really blessed to have found this group. I thought I can as long as you put a clause in the contract that stats I can assign this property of I chose to. Is there any contract like that around and would it work? Agian I really appreciate your guys input.
As Joe said, yes you can. However, you must have written permission from the HUD trustee (not the realtor listing the property) to assign the contract. You also can only wholesale a HUD property that was an Extended Listing. Exclusive Listings are reserved for owner occupants.
Rental Property Investor · Applegate, OR · Member since 2012 · 177 posts · 51 votes
10y
Hi Alli, I have actually wholesaled many HUD homes and was focused on that specific strategy for many years. On every transaction I had to do a double closing. I never once used transactional funding. I had the end buyer fund the A to B transaction. This was allowed in the state of TN. I would check with a closing attorneys in your area to make sure they can do the same.
Centennial, CO · Member since 2009 · 758 posts · 251 votes
10y
HUD typically will not allow assignments, so transactional funding can work. You also want to be aware that some HUD appointed closing agents will not want to perform closings for both your A-B and your B-C transactions. Their allegiance is with HUD and their primary interest is the business they receive from them and in closing the A-B deal. In that case a "Split Escrow" can be used where a different closing agent handles the B-C transaction. Transactional funders in general do not like Split Escrows, but they are possible.
Rule #1 - When you have a signed PA, the buyer and seller can't change. Whoever HUD agreed to sell the house to, is the only Entity that can buy it.
Rule #2 - You can't "change" the Buyer, you can however "sell" the buyer.
Make the offer in the name of an LLC. The LLC is the Buyer. When you get an accepted offer, before you close, sell the LLC. The new owner of the LLC closes...the buyer never changes.
Hi Alli, I have actually wholesaled many HUD homes and was focused on that specific strategy for many years. On every transaction I had to do a double closing. I never once used transactional funding. I had the end buyer fund the A to B transaction. This was allowed in the state of TN. I would check with a closing attorneys in your area to make sure they can do the same.
Here's to your success!
I appreciate the advice. will visit my attorney closing to make sure it's legal.
The reason why I asked this it's because
I met a realtor who will show me lists of hud homes before they are acutioned out and was trying to formulate a good strategy to wholesale them. If your in my shoes how I will you approche this.
Transactional Funder · Neptune, NJ · Member since 2011 · 187 posts · 86 votes
10y
If you do decide to use transactional funding, it is better if you submit your offer as an LLC or other entity vs. your name. Most transactional funders only fund entities. Additionally, there is no advantage whether you offer as an entity or a personal name.
I would also recommend to let HUD know that this is not a cash offer. It will have a mortgage attached to it as some transactional funders do have you sign a mortgage. If you didn't do this initially, this can easily be corrected after the fact with an addendum to HUD.
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
10y
HUD contracts cannot be assigned. Hud requires a tax id#(for and LLC or Corp) or SS# if individual and the property must be closed under that entity or name
HUD does not allow their contract to altered in any way so there are no clauses that can be added
HUD does require proof of funds or pre-qual letter along with proof of the entity before the contract will be ratified. Earnest money is $500 for under $50,000 and $1000 above $50000 and is nion-refundable for investors that fail to close
Double closing, Transactional funding and selling the entity are viable wholesaling options but I would strongly urge someone new to the business to partner with an experienced investor as all will require understanding and explanation to your end buyer
As of 2+ years ago, there are no HUD appointed closing companies. The buyer selects the closing company
@Alli Issa The Realtor that says he is providing you info of properties before they go to auction is just plain wrong. All HUD properties go through an owner occupant period before they are available to investors. HUD is not an auction at all but an opportunity to place an offer/bid on a daily basis.
Real Estate Investor · Davenport, FL · Member since 2015 · 516 posts · 152 votes
10y
Most HUD Brokerages deal with "extended" contracts and investors, as well as owner occupants.
The "extended" properties can be purchased by investors.
There is some marvelous information offered above... and we do these types of deals all the time. The trick here is that the Realtor you use needs to have a relationship with a Title Company that is:
A. HUD approved
B. Set up to do "Simultaneous Closings".
Verify that first with your Realtor, and it is quite simple...
You can find a step by step explanation earlier in this thread.
HUD contracts cannot be assigned. Hud requires a tax id#(for and LLC or Corp) or SS# if individual and the property must be closed under that entity or name
HUD does not allow their contract to altered in any way so there are no clauses that can be added
HUD does require proof of funds or pre-qual letter along with proof of the entity before the contract will be ratified. Earnest money is $500 for under $50,000 and $1000 above $50000 and is nion-refundable for investors that fail to close
Double closing, Transactional funding and selling the entity are viable wholesaling options but I would strongly urge someone new to the business to partner with an experienced investor as all will require understanding and explanation to your end buyer
As of 2+ years ago, there are no HUD appointed closing companies. The buyer selects the closing company
@Alli Issa The Realtor that says he is providing you info of properties before they go to auction is just plain wrong. All HUD properties go through an owner occupant period before they are available to investors. HUD is not an auction at all but an opportunity to place an offer/bid on a daily basis.
I mostly agree with @Greg H, the exception, is that HUD does do pre list Auctions on Auction.com, and Hudson and Marshall, and possibly Homesearch, (havent been able to verify this one) but the process is totally different, you may or maynot be buying from HUD, but if no one buys at these auctions it gets added to HUD's inventory and listed on HUDhomestore. in any case, you need to prove your money, submit Ernest, and lose the ernest if you dont close, so yea, you have skin in the game.
HUD contracts cannot be assigned. Hud requires a tax id#(for and LLC or Corp) or SS# if individual and the property must be closed under that entity or name
HUD does not allow their contract to altered in any way so there are no clauses that can be added
HUD does require proof of funds or pre-qual letter along with proof of the entity before the contract will be ratified. Earnest money is $500 for under $50,000 and $1000 above $50000 and is nion-refundable for investors that fail to close
Double closing, Transactional funding and selling the entity are viable wholesaling options but I would strongly urge someone new to the business to partner with an experienced investor as all will require understanding and explanation to your end buyer
As of 2+ years ago, there are no HUD appointed closing companies. The buyer selects the closing company
@Alli Issa The Realtor that says he is providing you info of properties before they go to auction is just plain wrong. All HUD properties go through an owner occupant period before they are available to investors. HUD is not an auction at all but an opportunity to place an offer/bid on a daily basis.
I mostly agree with @Greg H, the exception, is that HUD does do pre list Auctions on Auction.com, and Hudson and Marshall, and possibly Homesearch, (havent been able to verify this one) but the process is totally different, you may or maynot be buying from HUD, but if no one buys at these auctions it gets added to HUD's inventory and listed on HUDhomestore. in any case, you need to prove your money, submit Ernest, and lose the ernest if you dont close, so yea, you have skin in the game.
In the last year or so there banks have tried to move some of their FHA foreclosure inventory on Auction.com. This has been before they are "sold" to HUD and therefore would become a HUD home. Banks have always had the option to sell on their own instead of collecting on the FHA insurance/guarantee and they tend to take advantage of this during up markets. Hudson and Marshall is having a online HUD action Feb 22-26 and this appears to be all new inventory. This is the first time I remember them doing this in 15 years or so
HUD contracts cannot be assigned. Hud requires a tax id#(for and LLC or Corp) or SS# if individual and the property must be closed under that entity or name
HUD does not allow their contract to altered in any way so there are no clauses that can be added
HUD does require proof of funds or pre-qual letter along with proof of the entity before the contract will be ratified. Earnest money is $500 for under $50,000 and $1000 above $50000 and is nion-refundable for investors that fail to close
Double closing, Transactional funding and selling the entity are viable wholesaling options but I would strongly urge someone new to the business to partner with an experienced investor as all will require understanding and explanation to your end buyer
As of 2+ years ago, there are no HUD appointed closing companies. The buyer selects the closing company
@Alli Issa The Realtor that says he is providing you info of properties before they go to auction is just plain wrong. All HUD properties go through an owner occupant period before they are available to investors. HUD is not an auction at all but an opportunity to place an offer/bid on a daily basis.
I mostly agree with @Greg H, the exception, is that HUD does do pre list Auctions on Auction.com, and Hudson and Marshall, and possibly Homesearch, (havent been able to verify this one) but the process is totally different, you may or maynot be buying from HUD, but if no one buys at these auctions it gets added to HUD's inventory and listed on HUDhomestore. in any case, you need to prove your money, submit Ernest, and lose the ernest if you dont close, so yea, you have skin in the game.
In the last year or so there banks have tried to move some of their FHA foreclosure inventory on Auction.com. This has been before they are "sold" to HUD and therefore would become a HUD home. Banks have always had the option to sell on their own instead of collecting on the FHA insurance/guarantee and they tend to take advantage of this during up markets. Hudson and Marshall is having a online HUD action Feb 22-26 and this appears to be all new inventory. This is the first time I remember them doing this in 15 years or so
Hhudhomestore has been running a H&M banner for at least a year now, but mostly on the dated ones that go to Dollar status, the pre lists are relatively new, interesting how it changes, great insite.
Specialist · Gary, IN · Member since 2015 · 102 posts · 7 votes
9y
Wow. this thread is full of golden nuggets. Thank's allot for making this post and thank you thank you to everyone who contributed there knowledge into this. Information like this is what keeps new motivated and also keeps us from paying guru's!! Thank you @BP