Can I wholesale a bank short sale?

Question

That's my question....

Can I wholesale a short sale.

Do banks have a problem with this?

Wayne Brooks · Answer

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.

Mike Watkins · Answer

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.

Adrien C. · Answer

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.

Adrien C. · Answer

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).

Mark Ferguson · Answer

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.

Adrien C. · Answer

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.

Account Closed · Answer

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

Account Closed · Answer

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.

Account Closed · Answer

You are allowed to market a property for sale that you don't own in Indiana?

Shawn Holsapple · Answer

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...

Can I wholesale a bank short sale?

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