Can I wholesale a house under foreclosure?

Question

Hi, I came across a house and while talking to the owner, although motivated said the house is under foreclosure and he awaiting to hear from an attorney regarding a title issue. Has anyone had any experience with wholesaling foreclosed homes or even pre-foreclosures?

Lenzy Ruffin · Answer

Yes, you can wholesale a house under foreclosure. The owner still owns it and can sell it until the foreclosure process completes and they are no longer the owner. The house needs to be at a wholesale price, though, which will likely involve a short sale. If the owner is motivated and in foreclosure, they probably don't have equity because if they did, they would just sell the house to avoid foreclosure.

Just use the 70% rule. If you can wholesale it without doing a short sale, great. If not, find an investor or an agent in your area who is experienced in doing short sales and work out a win/win/win agreement for the homeowner, you, and the person with short sale experience.

https://www.biggerpockets.com/renewsblog/2014/02/14/70-rule-bible/

Joe Villeneuve · Answer

Yes.  Make the offer in an LLC...then just sell the LLC before you close.  The new owner of the LLC closes.  The Buyer never changes....it's stays the LLC that made the original accepted offer.

Mike Hill · Answer

Hey Justin,

If the house has been foreclosed on and bank owned (REO), you can absolutely wholesale. Simply present the offer to the listing agent who will give to the asset manager for approval. Once you have an executed contract you can look for a buyer to double close (banks wont allow assignments). Just make sure you read the addendum thoroughly to ensure there aren't any deed restrictions.

If the owner is in pre-foreclosure, you can still contract and wholesale before it goes to auction. If the homeowner doesn't have enough equity in the property (which is common - they owe the lender more than your offer price), you'll need to work out a short sale. You can still wholesale these deals, but again, just look out for those deed restrictions - they are more common with short sales and can even be more strict.

In my opinion REO's  are simpler, faster and easier to get done but the profits (especially in my market ) are typically smaller.

Short Sales are typically a pain - they take a lot of investment, time, patience, paperwork, creativity (i.e. to get around restrictions), but the payoff is generally greater. I have a short sale now that I've been working on since early October of 2015. We are closing on 3/18/16 :)

Good luck!

Joe Villeneuve · Answer

Your asking me to comment on something that originated 4 years ago.  You need to probably give me more, and specific details...and if you prefer, you can PM me rather than do this in an open forum.

Erasmo Soto · Answer

@Joe Villeneuve have the same issue present to me now. In that case, do you still need to double close or can it be assigned? if not, is the assignment fee paid outside of contract?

Account Closed · Answer

Thanks Guys

Can I wholesale a house under foreclosure?

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