Wholesaling HUD homes using two closing companies?

Question

I've heard that people are flipping HUD homes by using two closing companies. The B-C transaction is closed at one closing company, then the funds needed for the A-B side are sent to the other closing company (HUD's closing company). The A-B side closes, and the deed is sent to the B-C closing company and everything is wrapped up.

Is this strategy valid? Anyone have any experience with this?

Priscilla Z. · Answer

Update.  Closed our wholesale deal, with TWO closing companies.  Very time consuming and you need to make sure you are on top of details on both ends to make sure things to smoothly.  Then add transactional funding?  It'll be even messier, but it is possible, at least in Florida it is.

To our surprise, the HUD closing company offered to do both of our transactions next time.  They understand what we are doing so it will make things even smoother.  If you can stick to one closing company like Jason Stackhouse said, that's the best way to do it because it did get messy for us, but mission accomplished and we are on to the next.

Jason Stackhouse · Answer

I have done double closings before with bank owned/HUD homes but we only used the 1 title company.  It seems very tricky/difficult to do double closing with 2 separate title co's as it could be a problem sending over the funds and deed and funds in time.  Sticking with one title agent to do both closings is definitely a lot simpler since they already have the funds & deed from A-B and can easily transfer to the B-C closing.

Hope this helps...

Ted Akers · Answer

The vast majority of HUD appointed title companies choose to not close both transactions.  It is typically just a preference that they wish to focus on their HUD allocation of properties (their bread and butter), and do not wish to participate with more involved A-B-C transactions.  Thus, a split escrow with two title companies is usually necessary.  Most transactional funders will not close a split escrow, but it is possible if you can schedule your end buyer to close and have funds in escrow with the second title company before having to disburse on your A-B purchase.

Account Closed · Answer

Cameron,

The broker is trying to get you in trouble most title and escrow will not allow you to used the end buyers funds to closed A to B transaction. If you don't have the funds to closed A to B pay a transactional funded to help you.

Joe Gore

George Bittar · Answer

Fantastic thread! I just put my first HUD offer in and fingers crossed for acceptance. I have been plotting out next steps and have transactional funding in place, but would love to reduce this expense. It sounds like one title company is the way to go here to accommodate this.

Bobby N. · Answer

I am new to the forum and i am very thankful for all the shared experiences investors are having in different parts of the country. I guess everyone's outcome is highly dependent on their particular location.

Account Closed · Answer

Priscilla Z, lawyers advantage or island title have horrible settlement costs.    Move the transaction to your local title company and have them close both sides.    With your new title controlling the deed they can typically handle the A-B B-C transaction much easier.   AND CHEAPER.    I love some of the staff at the above 2 title companies, but I'm going to bite my tongue at the overall companies and how they operate.

Drew, pay attention to what i'm saying above and I'll add to it.   If your local title company handles the A-B, they can advise your client on what the deed will look like on his B-C transaction.     As for proof, ask him to prove there aren't aliens.    Make the contract contingent on having no deed restrictions and he can read the deed at closing to confirm.      He expecting you to have the deed in your back pocket or something?

If you don't use HUD's title company, you pay them nothing on the A-B.    Their settlement costs with hud are like 50 cents or a dollar.  They expect to get the buyer side too and they abuse that.

Drew Dickinson · Answer

In the HUD deals that I've done (only 3 or 4), they have never required me to use their title company.  In fact in their AOS, it has a spot where you can choose between "HUD'S designated closing agent" or write your own in.  Problem I see with the separate closes is the fact that someone is "buying" a place from you that you don't technically own yet.  Your buyer better trust you.  On a side note, I have a guy who I'm flipping a HUD deal to that has asked me to prove that HUD does not put deed restrictions on the property.  Anyone have anything formal they can direct me to? I know that HUD doesn't (FNMA sometimes will), but I'm having a hard time finding anything that tells me so.  Thanks.

Priscilla Z. · Answer

Jerry Kisasonak & Jason Stackhouse  Thanks guys! :)

Jason Stackhouse · Answer

Great job @Priscilla Z - glad to hear you got the deal closed and now on to the next.  Also, good news that the HUD closing co. agreed to do your next deal.  That will definitely save you lots of time and headaches!  Keep moving forward!

Wholesaling HUD homes using two closing companies?

Most Popular Reply