Newbie HUD wholesaling questions

[Adam Moyer]

Forgive me for the naive questions, but I have a few questions on wholesaling HUD homes.

1. I think the biggest question would be how can people wholesale HUD homes in the first place? If a wholesaler buys a property in an auction style format, they would have usually had to have placed the highest bid. Why would an investor purchase a property from a wholesaler for a higher price than they could have paid in an auction?

2. Let's say I purchased an HUD home in an auction and got one heck of a deal on it Let's just say I got it for $20,000 and it has a 100k ARV (minimal repairs, I know its not likely to find but bear with me). Here are some questions I have:
A. How long would I have to find a buyer before closing typically?
B. Would any cash be due out of my pocket at all before closing (or any other time for that matter)?
C. Let's say for whatever reason I cannot find a buyer for this property. What would happen then? Would I legally be obligated to purchase this property still? Would I face any recourse?

Thanks!

[Ryan Webber]

Originally posted by J Scott:

1. Double close -- Purchase and resell a couple hours/days later. You'll need the cash to purchase if you do it this way.

I double closed a HUD on Monday with no cash out of my pocket except for my earnest money. I did have to show proof of financing but I didn't use any financing to do it. It depends on your state and on the title agent.

Outside of that, J Scott is spot on with everything else. Publicly marketed properties obviously have already had some buyers looking at it, and those buyers are not typically interested in buying it from you (most of the time). I had one that I sold to an investor who put in their bid the day after mine was accepted. They were willing to pay more for it, so they bought it from me.

In an real auction format that probably won't happen.